TAXATION: COMMISSION SPLIT ON ALCOHOL EXCISE DUTY DIRECTIVE REVIEW.

The debate on the scope for updating Directive 92/84/EEC, which sets minimum excise duty rates for wine, beer and spirits, has not yielded a consensus within the team of Commissioners. Any modification of the Directive requires unanimous backing from the Member States, but many, often for very different reasons, are opposed to any increase in rates.

Wine.

Mr Bolkestein believes the introduction of an excise duty rate above zero for wine will have a negligible impact on consumption. He acknowledged that this element of his proposal is the most controversial. Producer countries fear taxation will cut demand for cheap table wine and therefore have a negative impact on regions that depend significantly on the product.

Faced with the reluctance of his colleagues, the Dutch Commissioner insists his proposal takes account of this eventuality since it sets a minimum excise rate equivalent to 50% of that applied to beer. He also explains that the reduction in demand for wine experienced in producer countries is also due shifts in consumption habits.

However, the Taxation Commissioner has also expressed a readiness to take account of other concerns expressed by wine producers. He would thus be prepared to permit Member States to introduce an excise duty exemption on direct sales (with no intermediary) to final consumers by small producers. This practice largely concerns the cheap wines segment of the market and in certain EU Member States such as Germany, accounts for almost 30% of sales. The Member States would lay down the conditions for the application of this exemption.

Another adaptation envisaged by Mr Bolkestein concerns the application of a rate band (the proposal includes a minimum and maximum duty rate). Producer countries fear the introduction of rate band represents the first step towards a steady increase in excise duty rates to finally arrive at the maximum level. However, the Commissioner argues that...