Duty rates were last set in 1992 and have not been increased since then.
Although minimum rates are set by the EU, national governments have the right to increase duty rates. In fact, many governments do so on the grounds of public health. This is particularly true of Scandanavian countries, whose strong public health policies are related with high duty rates.
Europewide, there are minimum taxes on beer, fortified wines and spirits. In contrast, wine producing states of southern and eastern Europe often set a duty rate of zero percent on wine to encourage consumption. This zero percent rate reflects the power of the European wine lobby.
The actual impact on prices in the countries affected by the decision will be minimal, according to the Commission, especially as most EU member states already charge taxes well above the bloc’s limit on alcohol.
The Commission’s latest proposal has been prepared by DG TAXUD, and as such, should be viewed as a technical measure rather than a health measure. Therefore, this proposal cannot be compared with DG Sanco’s alcohol strategy, due to be adopted before the end of 2006.
The European Alcohol Policy Alliance (Eurocare) has repeatedly emphasised the importance of an evidence-based approach in tackling alochol with regard to public health. There is ample evidence that alcohol taxes are one of the main instruments available to reduce alcohol harm. There is also a need to ensure that alcohol taxes are sufficient to cover the costs that alcohol harm imposes on the public purse.
The Commission present their proposal to EU Finance Chiefs in the ECOFIN Meeting 28 November 2006
On Tuesday 28 November, EU Finance Chiefs met to discuss the Commission’s proposal to increase the rate of duty on alcohol, however the meeting proved unsuccessful as Ministers failed to agree with the proposal.
At the ECOFIN meeting, the Commission presented a compromised proposal which, if adopted would have allowed the revalorisation of excise rates to date from 2004 as opposed to 1992, resulting in a 4.5 % increase on all alcoholic products. It also made a recommendation for an automatic revalorisation mechanism.
Despite the compromised proposal from the Commission and the fact that the majority of Member states would be unaffected by this proposal, the Ministers failed to cooperate and decided to postpone the decision.
The Ministers invited the Commission to "carry out a comprehensive study of the taxation of alcohol and alcoholic beverages, inculding trends in competitive positions and in levels of taxes and prices, and to present the results of that study during the first half of 2007", in order to help facilitate the Council’s decision.
The European Parliament Economic Committee calls for an abolition of mandatory excise duty on alcohol
The Economic and Monetary Affairs of the European Parliament has voted to scrapped mandatory excise duty on alcohol: The rapporteur, Astrid Lulling (LU - EPP-ED) argues that the minimum levels have failed to achieve convergence in excise duties.
Alternatively, the ECON committe proposes tax competition which must be favoured as this will promote free, unrestricted movement of alcohol across Europe. They therefore call for the establishment of a Code of Conduct in which Member States levying excise duty rates about EU average, should take measures to freeze their excise duty and gradually decrease it.
The European Parliament in plenary REJECTED the Lulling report.
Eurocare press release
Related Links:
Combating alcohol-related harm in Europe - evidence of effective and cost-effective measures
