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EU Tax Chief Tries to Break Alcohol Duty Deadlock

Source: Reuters
20/11/2006

Vienna, Nov 20 - The European Commission has proposed a new compromise on increasing beer and spirits duties in a bid to break a deadlock among European Union countries.

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EU Tax and Customs Commissioner Laszlo Kovacs said he had written to EU finance ministers last week suggesting a 4.5 percent increase to the minimum duty on beer and spirits, from the 31 percent rise currently proposed.

The compromise would adjust for inflation only since the expansion of the currently 25-country EU in 2004, rather than since the tax was last set 14 years ago.

The bloc consumes 60 billion litres of beer per year.

Finance ministers are set to discuss alcohol excise levels again next week after talks stalled earlier this month, and Kovacs said he had asked for replies by Nov. 28.

"It's a reasonable proposal but I don't know whether it will be acceptable," Kovacs told reporters on the sidelines of an economics conference in Vienna.

"I've had just a few reactions and these were positive, but it is certainly not enough because we need unanimous agreement."

A Finnish compromise to exclude beer from the inflation adjustment won support from the bloc's two biggest per-capita drinkers, Germany and the Czech Republic, but Sweden and others vetoed the move, leaving talks stalled.

Kovacs said Germany had not responded to the latest proposal but that it would not increase beer prices there anyway, since the new minimum level would be below the rate paid in Germany.



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