Brussels, 05/07/2006 (Agence Europe) - László Kovács declared on Wednesday 5 July in an interview to Agence EUROPE that, “between 1992 and 2005, inflation increased by 31%”. The European Commissioner for taxation added that his services were currently working on drafting a legislative proposal on excise taxes on alcohol and alcoholic drinks, “which should be ready for September”. The Commissioner said that he was “sure” that such proposals would be adopted at the Ecofin Council. This revision, which amends Directive 92/84/EC on the harmonisation of excise taxes on alcohol and alcoholic drinks will from 1 January 2008 include a re-evaluation of excise taxes, which will be similar to the increase in inflation observed since 1992. According to Kovács, this will not prevent Member States what want to go further from doing so. He explained that “Sweden is applying rates that are ten times higher than the minimum rates”.
In an effort to take into account the difficulties experienced by several Member States, the Commission is proposing to introduce until 2010, a transition period that will enable countries adapt to the rise in excise rates. Mr Kovács explained that “some Member States, mainly the new ones, have experienced real difficulties”, particularly when they joined the EU in May 2004 and had to “considerably raise their excise taxes to comply with Community legislation”. Mr Kovács said that “Latvia, Lithuania, Malta and the Czech Republic” are some of the countries that have reservations about an immediate increase in excise taxes on alcoholic drinks. He also pointed out that the transition period was “not specifically limited to new Member States…it will be up to Member States to look into the matter, even in the older Member States”.
Will amendment of European legislation involve all alcoholic drinks? The Commission explained that it would include “all alcoholic drinks, except wine because in the case of wine, the minimum rates (of excise) are zero”. According to Commissioner Kovács the exception on wine would not change, “wine producing countries are firmly opposed to the introduction of an increase. The current rate for wine is nil: amending it require unanimity!”
Reassessing excise rates on drinks will certainly allow Member States to pocket more fiscal returns but consideration about public health is motivating them more. The Commissioner explained that, “Finland wants to stop the increasing consummation of alcohol among young people and it is not alone in this, there's also Sweden and Denmark”. Alluding to discussions with the Finnish minister of finance during the meeting between the Finnish presidency and the European Commission (EUROPE 9224), he added that, “the number one reason for this country is not to increase tax returns, the number one reasons is to improve public health”.
In April 2005, the Commission received a mandate from the Ecofin Council for proposing an adjustment of minimum rates of excise on alcoholic drinks that took into account inflation (EUROPE 8927). Currently, Latvia and Malta are applying the minimum excise rate for beer, Greece for intermediate products in the sense of the directive (e.g.: Porto, Pineau des Charentes). These countries will therefore be the most affected by an increase in the minimum excise rates.