Tuesday, April 12, 2005

EU wine tax faces veto

The FT has also picked on the matter of alcohol taxation today. Wine may well escape due to concerns about adverse reaction that might impact the Constitution YES campaign in countries such as France. That still leaves beer and spirits – Commissioners and Finance Ministers will certainly need a stiff drink or two if they intend to announce a hike in the minimum rate of up to 20%!

The European Commission wants to increase harmonisation of alcohol excise duties in the EU, in an attempt to tackle fraud and smuggling inside the single market. It also believes the big variations in excise duties distort the market, although differentials in value added tax are often a more significant factor.

Finance ministers, meeting at Tuesday's Ecofin council in Luxembourg, are expected to instruct the Commission to update the 1992 deal which brought modest harmonisation of EU excise rates on alcohol. That set minimum rates for beer, fortified wine and spirits, but left wine and sparkling wine untouched. Sweden has led demands for the minimum rates of excise duty to be increased in line with inflation they have been unchanged since 1993 in effect increasing them by over 20 per cent.
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