France backs down on strong beer tax

Related tags Tax

A proposed increase in the taxation levels imposed on strong beer
has been dropped by the French government on advice from Brussels.
The tax would have pushed up the French price of beer over 8.5 per
cent abv - most of which comes from Belgium.

A proposed increase in the taxation levels imposed on strong beer has been dropped by the French government on advice from Brussels.

The proposed measure, which would have seen taxes of €200 per hectolitre on beer with an alcohol content of 8.5 per cent or higher, was designed to protect public health, according to the French government.

But the measures had met with opposition from brewers in Belgium, whose products would have been hardest hit by the tax increase. The Belgian authorities had said that the measure was nothing more than protectionism by another name.

Unfortunately for the Paris government, European officials in Brussels tended to agree with the national authorities there. In a press release, the French Finance Ministry said that it had been told by the Commission that such a tax would not conform to Community law, as it affected mainly foreign beers.

European law forbids any Member State to discriminate against products from another Member State, the Ministry said.

But the government clearly sees a link between alcohol consumption and a spiralling health budget, as the Ministry said it was to set up an inter-ministerial working group to examine whether taxation could be a means of reducing increasing alcohol consumption, in particular among young people.

For years, the UK drinks trade has railed against its cross-Channel neighbour because French taxation levels make buying alcohol much cheaper there. While British producers would undoubtedly welcome an increase in French alcohol taxes - whatever the reason - producers in France itself are likely to fiercely oppose any change.

Wine producers in particular, whose products are virtually tax-free, could be the hardest hit - and are also likely to protest the loudest - if an increase in taxes is proposed. They may also escape, of course, given the links between wine consumption and health - but they will certainly hold their breath until the working party has made its recommendations.

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