Pressure on Monti for new drinks duty report

Date: 10/12/1998

By Chris Johnstone

THE UK and Ireland are stepping up pressure on Taxation and Single Market Commissioner Mario Monti to deliver a long-awaited report on minimum excise duties for wine, beer and spirits.

The European Commission drew up a report on levels of duty for the first, and the only, time in 1995, even though it is supposed to repeat the exercise every two years. The long wait for a fresh report has fostered suspicions that Monti is trying to sit on a politically explosive subject.

The biggest issue at stake is whether the Commission will recommend minimum rates of duty on wine to bring it into line with beer and spirits, on which Union governments are already forced to levy duties. This would split the EU down the middle, sparking fierce opposition from those member states which have large but struggling wine-making sectors.

Taking advantage of the current regime, seven member states (Spain, Germany, Austria, Luxembourg, Greece, Italy and Portugal) have no duties on local sales of wine, while those in France are so low as to be almost non-existent.

"We would argue that the creation of a single market in the drinks sector cannot take place with this sort of discriminatory tax regime. We understand this is politically difficult for Monti, but we would like to see the report," said a British official.

Monti's home country, Italy, is Europe's second-biggest wine producer and the sector is already in difficulties, with a growing lake of unwanted, low quality wine as European drinkers turn increasingly to higher quality exports from Australia, South Africa and Latin America.

The UK's demands for action are being echoed by Ireland. "We would like to see this report. We have already asked on a number of occasions about progress on it," said one diplomat.

The last Commission report on duties in 1995 fuelled calls from spirits and beer producers for an end to the special treatment given to wine. It concluded that there was competition between different types of alcoholic drinks and that the institution should address tax distortions.

Commission officials admit this has left Monti with little room for manoeuvre. "Doing nothing is not really an answer. Some member states want to see action on this," said one.

UK and Ireland pressure the European Commission to deliver a long-awaited report on minimum excise duties for wine, beer and spirits.