Saturday, September 09, 2006

Larger tax on lager, thanks to Brussels stitch-up

The EU has recently announced an increase in the minimum rates of duty on alcohol, ie your German / Czech half-litre will cost more. Alcohol duties have to be set within a range determined by the EU, its one area where tax harmonisation already exists to a limited extent. The increases are calculated and presented as inflationary.

Consequently several member states will have to increase duties on beer and whiskey. But not on wine, as the minimum duty is nil, which when multiplied by an inflationary factor still comes to nil. So at least the maths ability of the EC is improving. They might even get their 1994 accounts drawn up within the next decade at this rate of progress.

This isn't harmonisation to ensure that the internal market functions smoothly. Nor is it an attempt to reduce smuggling, that would be best done by UK Customs being more efficient or UK duties reducing, or failing that forcing France and the UK, and Sweden and Denmark to align their rates.

Its protectionism for the European wine industry by enabling Continental Member States, in fact 7 of them, to avoid having duty on wine, whilst charging, and being forced to charge duty on competitor products, eg UK spirits and Eastern European beer. Curiously, there are a number of State Aid cases going on throughout Europe whereby a specialist tax relief available to a particular region or industry is held to be an illegal subsidy. The TaxCutter fails to see why not levying duty on wine, whilst levying duty on other alcoholic beverages, is not similarly illegal state aid. And the answer is because the EU applies the rules based on political not legal analysis.

How does this affect the UK. Predictably, UK duties already exceed the new minimums.

To get to this answer, the Commission wrote to Member States asking for the information to compile their analysis. Here's what help they got:

"We have received data on excise rates and consumption from some member states, but not all. We received comprehensive replies from Austria, Belgium, Germany,Denmark, Finland, UK, Ireland, Netherlands, Spain and Sweden. We received partial information from Greece and Portugal. We have not received data on excise rates from France, Italy and Luxembourg and data from these countries had to be completed using other sources."



At 9:03 AM, Anonymous Anonymous said...

Ahhh. How sweet. A lovely Oatenesque holiday snap there. I hope The Taxcutter isn't the one playing into the hands of EU bureaucrats by slurping on Tesco Value lager. Obviously the one downing the Vino Collapso Rouge is the most tax efficient.

At 9:00 AM, Anonymous Anonymous said...

Is that David Mitchell of Peep Show fame on the right? I knew it was a wig.....


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