Bolkestein stirred to shake up drinks market

By Peter Chapman

Date: 23/10/03

THE EU's distortion-riddled market for alcoholic drinks would face a radical shake-up under proposals being considered by Frits Bolkestein, the internal market commissioner.

European Voice understands Bolkestein's taxation and customs department is working on a draft directive that, if adopted, would open up the market for internet sales of alcoholic drinks.

This would allow customers living in high-tax countries such as Sweden, Finland or Britain to pay far fewer duties by buying their drinks online.

They would be responsible for paying excise duties only in the country where the seller is based, instead of sky-high taxes at home.

"It is one of the ideas under discussion," confirmed Bolkestein's spokesman, Jonathan Todd.

The commissioner this week sent a legal warning to Sweden, urging the country to stop restrictions on customers trying to shop online to escape the high prices of the local state monopoly drinks outlet, the Systembolaget.

The new regime would mean huge savings for many EU citizens if they shop on sites in low-duty countries such as France, Greece or Portugal. The only catch for consumers is that they would have to arrange for a friend or a private shipping company to bring the drinks home from abroad.

But experts predict websites selling drinks will in future offer links to people willing to deliver their products.

Currently the law forces online purchasers to pay their domestic levels of duty when they buy goods.

Critics of the existing regime, including Bolkestein, believe it discriminates between the online and off-line spheres, because it means bargain-hunting customers travelling in person are allowed to pay local duties at foreign supermarkets or chateaux.

The new rules would also carry a proposal to ditch the so-called recommended limits for imports of alcoholic drinks intended for personal consumption.

These are used by customs watchdogs to help them gauge whether people bringing back large quantities of duty-paid drink intend to resell it without paying extra duties.

The changes would pave the way for far greater freedoms for customers travelling abroad to purchase drinks for parties or weddings. Bolkestein has threatened legal action against the UK over allegations that zealous officials are confiscating drinks intended for private consumption.

Sweden and Finland are already obliged to phase out next year the temporary limits on personal imports of alcohol they negotiated as part of their entry into the Union.

Martin Rees, a lawyer representing the Brewers of Europe, said the new law would remove some of the distortions in the EU market and put greater pressure on member states to "see sense" and lower their duties.

But, until that happens, it could make life even tougher for regional brewers and distillers based in high-tax countries because their customers would find it even easier to buy cheaper drinks abroad.

Bolkestein was forced to ditch plans to narrow the huge variations in excise duties last year because of opposition from member states.