MEPs flatten alcohol tax plan

By Chris Mercer

- Last updated on GMT

Related tags: Member states, European union, United kingdom

Plans to raise minimum excise tax on beer and spirits in the EU
came to a standstill this week, after a hammer blow from the
European Parliament.

Members of the Parliament voted to send the plans back to its Economic Affairs Committee for further discussion. If Parliament does not give an opinion, proposals cannot move forward. The move is another setback for the Commission in its attempt to raise minimum beer and spirits duties by 31 per cent to bring them in line with inflation. The current rate is more than 13 years old. But its proposal was also rejected by finance ministers from EU member states last autumn, and particularly the Czech Republic, which fears public unrest from rising beer prices. An air of pessimism has haunted the plan since the Council of Ministers meeting. "It doesn't look good. I wouldn't say the discussions are dead, but they're not far from it,"​ an observer close to negotiations told​ at the time. The Commission plan had already been whittled down to beer and spirit drinks, after France and 11 other member states ensured wine was taken off the list in 2005. Both the Commission and member states with above average duty rates on alcohol, such as the UK, have argued that raising minimum rates may help to prevent fraud. UK import taxes for alcoholic drinks were nearly double those of France. "It is clear to all that the widely divergent levels of alcohol taxation in member states distort the market and facilitate fraud and smuggling, but without the agreement of all member states nothing can change,"​ said former taxation commissioner Frits Bolkestein, launching the Commission's proposal.

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