Wine and beer tax hike plan gets bitter reaction

Date: 21/02/02

By Peter Chapman

SEVEN member states will have to charge excise duty on wine for the first time under controversial proposals drawn up by EU tax chief Frits Bolkestein.

At the same time France would face a four-fold increase on its current rates.

Beer makers in Germany, Spain and Luxembourg would also face a hike in excise duties under the Dutch commissioner's plan, which is likely to provoke a bitter reaction from member states eager to maintain control over their national rates.

Marion Wolfers, secretary-general of the European Wine Committee, which represents producers, said the proposal would be highly damaging to her members - many of whom rely on Common Agricultural Policy subsidies to stay afloat.

'It is clear that this is going to provoke an increase in price in a sector that is already in difficulties and is already being given aid. Is it logical? There should be coherence between policies. They are going to increase the price and consequently increase the need for intervention,' she said.

Bolkestein claims the proposals would be good for health, limit tax fraud and reduce wide differentials in rates which have caused a surge in cross-border shopping - good news for low-rate countries, but damaging to business and national exchequers with higher levies.

Under his plan the minimum duty on a typical 75cl bottle of wine containing 12 alcohol would be 10.4 cents. This rate, to be phased in by 2003, would rise to 11.25 cents in 2007.

Countries could charge up to a maximum of 90 cents in 2003; member states currently charging more than this would have to freeze their rates.

Germany, Greece, Austria, Portugal, Luxembourg, Spain and Italy would all have to charge excise duty on still wine for the first time; Germany and Austria already levy a duty of €1.02 and €1.08 on a 75cl bottle of sparkling wine.

France, Europe's leading wine producer, currently charges only 2.55 cents a bottle and would have to charge at least 10.4 cents - four times more.

Beer makers would face new minimum and maximum 'target' rates of 12 cents and 50 cents a litre, based on an alcohol content of 5. Germany, Spain and Luxembourg would have to increase rates by 2 cents a litre.

The secretary-general of Brewers of Europe, Rodolphe de Looz-Corswarem, said the proposal would fail to avoid distortions in prices because the highest-charging member states - Finland, Ireland, UK and Sweden - would maintain their current duties which are above the new threshold.

However the Commission says it will raise the minimum and maximum levels in line with inflation - meaning the differences between the highest and lowest charging countries will be eroded over time.

De Looz-Corswarem is not impressed: 'It is like a speed limit which says that if you are driving twice as fast as the speed limit when you enter a restricted zone, you can continue to drive twice as fast provided you don't drive any faster.'

Bolkestein's proposals are currently subject to 'interservice consultation' between Commission departments. French government spokesman Gérard Guillonneau forecast strong opposition to the proposal: 'There are a lot of wine producers in the European Community,' he said.

Under EU tax rules, member states would all have to support the changes before they could become law.

Seven Member States will have to charge excise duty on wine for the first time under controversial proposals drawn up by EU Tax Commissioner Frits Bolkestein.