Brussels, 08/09/2006 (Agence Europe) - On 8 September the European Commission adopted a proposal to increase minimum excise rates on alcohol and alcoholic drinks by 31% from 1 January 2008 (EUROPE 9128). The increase in these rates, which only takes into account the rate of inflation, affects beer, intermediate products (fortified wines such as Port and sherry) and alcohol but not wine, for which the minimum rates are zero. The Commission is therefore responding to the expectations of the Ecofin Council which in April 2005 called for the presentation of a proposal to “to adjust the minimum excise rates of duty to prevent a reduction in the real value of minimum Community rates” EUROPE 8927).
The main objective of this proposal is to increase the minimum rates taking into account the inflation since 1992 and, therefore, restore their real value as set out by the Council in 1992 in the 92/84/EEC directive on the harmonisation of excise rates on alcohol and alcoholic drinks. This would simply require an adjustment of the minimum rates of inflation of prices between 1993 and 2005, evaluated at 31% by the Commission. The Commission argues that if this is not forthcoming, there can be no guarantee of the internal market without tax borders, working effectively.
The Commission indicates that most Member States are already applying rates that are higher than the re-evaluated minimum rates. These countries should therefore not take any measures. The proposal affords transition periods to Member States that find it difficult to respect the 1 January 2008 deadline to align their national rates on the re-evaluated minima. The length of this transition period depends on the efforts agreed on by these Member States: until 1 January 2009 for Member States obliged to make a 10 to 20% increase in their national rates; 2) until January 2010 for those that have to increase their rates by more than 20%.
The Commission concludes that the proposal will have a minimum economic and social impact. Beer: the adoption of the proposal will compel Germany, Luxembourg, Czech Republic: Malta, Latvia and Lithuania to increase excise rates by a centime of a Euro on a half litre of 5% alcohol beer by 1 January 2010 at the latest. The Commission points out that small business (breweries and distilleries will benefit from reduced rates. The Commission believes that consumers will not an increase that is above the average rate of inflation in the EU.