Transit fraud proposals watered down after attack from transport sector

Date: 19/03/1998

By Chris Johnstone

TAX officials in the European Commission are revising proposals to clamp down on fraud in cross-border freight following fierce attacks on their initial plans by transport companies and their clients.

In an effort to answer industry's criticisms, officials are replacing some of the burdensome rules originally called for by the Directorate-General for taxation (DGXXI) with less rigid proposals.

But while these changes have been welcomed by business as a move in the right direction, industry sources say they still fall short of what is needed.

The measures at the centre of controversy form part of the Commission's action programme against fraud. They are aimed at preventing billions of ecu from going missing each year as a result of scams, including false declarations of goods and cargoes disappearing from lorries before duty or value added tax has been paid.

However, the Commission's initial proposals sparked an outcry in the haulage industry. "They just did not seem to understand how the business works," said one transport association spokesman.

Under the original plan, firms would have had to declare their routes in advance and stick rigidly to them; lorries would have been sealed at the start of journeys and only unsealed when they reached their destination; and firms would have been vetted closely for the first six months of operations to establish their trustworthiness.

These ideas have now been modified or, in some cases, dropped altogether.

Hauliers will, as now, be able to change routes to avoid delays or pick up goods unless a specified route has been clearly fixed between the haulage company and its client. Instead of sealing lorries, officials have agreed that separate consignments can be individually sealed, allowing new goods to be taken on while preventing loss from or tampering with existing cargo .

The idea of a six month 'probationary period' before new operators could qualify for simplified transit procedures has also been abandoned after critics warned this would have imposed such a burden on newcomer firms, in the form of extra paperwork, that they would have gone out of business before they could become established.

"New companies just would not have been able to compete with those rules," said Philip von Schoppenthau, spokesman for retailers' association Eurocommerce.

However, Commission officials are sticking by one proposal which critics claim will add to costs without helping to fight fraud - the demand that transport companies should have six-figure codes describing the transit goods they are carrying, and separate papers detailing their value and what tax should be paid.

"The problem with this suggestion is that you can still mis-declare goods or not declare them at all," said von Schoppenthau, adding: "This is just a statistical tool for the Commission so that it can better measure the flow of goods."