Report spies smugglers ahoy in EU beer tax variance
In the 16 years since European council directive 92/83/EEC was established in attempts to harmonise excise duties on beer, a distinct variation between in tax rates has developed across the bloc, according to findings by research group Canadean.
In a special report, the analyst claims that little progress has been made towards tax harmonisation, with strong discrepancies between Eastern European and Mediterranean markets compared to those of Scandinavia and the UK.
Scale of difference
In terms of actual tax weight across Europe, the findings suggest that duties on a litre of standard local beer – based around alcohol content – vary from €0.21 in Bulgaria to €1.59 in Finland.
It is the these variations across the EU marketplace that Canadean says are playing into the hands of smugglers by distorting sales and encouraging consumers to look across borders for their beer needs.
“In the member states affected by high levels of personal imports, there is considerable hardship put on their domestic brewers, reduced tax revenues and the undermining of their public health policy,” stated the report. “Not only this, but it is a contradiction of the principle of a single market, a situation underlined by the fact that Swedish and Danish Brewers are producing beers to be traded over the border to their own domestic consumers at a lower price.”
Trade impact
The analyst claims that the findings account for many of the border trade patterns seen across the European Union, with UK beer during 2007 almost twice as much as their French counterparts when converted into Euros.
With the weakening of the UK currency in the last few months, Canadean claims that its data still shows a tax discrepancy of around 1.8 times higher than France.
According to the report, similar patterns can be seen across the bloc, with Swedes reportedly flocking to Germany to enjoy duty discounts on beer of about 60 per cent compared to brews in their own country. Similarly, Finnish consumers are also reportedly enjoying tax savings of up to 40 per cent on beers in Estonia over their own domestic market.
Expansion difficulties
With the European Union continuing to mull expansion beyond its current 27 state membership, Canadean suggests that a potential further shift eastwards may require a rethink of existing policy.
"Even Germany, which has historically prospered from border trade activity, has begun to see a trickle of its own consumers cross into the Czech Republic to buy beer,” stated the analyst. "Compromise continues to seem distant and it is very unlikely that the high tax nations will lower their taxes to bring them into line with the low taxation nations; indeed Finland, Sweden and the UK have all increased their tax rates in 2008 to further amplify the differences."
