Brussels, 08/04/2008 (Agence Europe) - In a ruling delivered on Tuesday 8 April 2008, the European Court of Justice said that Swedish legislation levies higher duty on wine (most of which is imported) than on beer (most of which is brewed in Sweden) does not infringe EU law. The Court argues that wine and beer are, to a certain extent, capable of meeting identical needs, but given the difference in selling price between a litre of wine and a litre of beer, the difference in excise duty is not liable to influence consumer behaviour.
The European Commission sent the case to the Court of Justice. The Commission had demonstrated in similar cases against Belgium and the United Kingdom - both of which brew a lot of beer but tend to import wine - that consumers view ordinary table wine in much the same way as standard beer, particularly in the hotel and catering industries. In July 2008, Advocate General Paolo Mengozzi gave the opinion in his conclusions (see EUROPE 9472) that when there is mutual substitutability and different prices due to taxation, then this infringes Article 90 of the EC Treaty which rules that domestic products must be treated on an equal footing with products from other member states.
But the Court of Justice did not reach the same conclusion. After an in-depth investigation, it concluded that the price difference due to the higher excise duty levied on wine is so slight that it is unlikely to influence consumer choice and therefore does not infringe EU law. Duty is calculated in accordance with the alcoholic strength of the drink. In its submission, the Commission compares the purchase of a litre of wine with a litre of beer, but this comparison is unrealistic when you actually look at the market and similar strength drinks, explains the Court. If you compare the price of a glass of wine with the price of a glass of beer (which is bigger), the effect of the higher taxation on wine is negligible. Karin Wistrand, legal advisor to the Swedish foreign ministry, said that the alignment in taxation demanded by the Commission would result in the retail price of a litre of wine falling by only 50 eurocents and the price of a litre of wine in a restaurant would fall by even less. She said she didn't think consumers would drink wine rather than beer simply in reaction to such a level of price reduction. The Court agrees with this view and confirmed the Swedish tax system. (C.D.)