Friday, 22 March 2013

European whine lake

There have been suggestions that this week’s cut in beer duty may be judged illegal under European law, as it supposedly discriminates against wine in relation to beer, but I have to say I’m not entirely convinced. The 27 countries of the European Union have widely differing duty regimes on different types of alcoholic drinks, both in absolute terms and relative between categories. 15 of the 27 countries – all, obviously, wine producers – levy no duty whatsoever on table wine, while wine duty in France is negligible.

France recently imposed a swingeing hike in duty on beer (which is mostly imported) while leaving that on wine (which is mostly home-produced) untouched. In the past, there have been several occasions when the British Chancellor has frozen spirits duty while raising beer duty, and in 2010 Alastair Darling imposed a 10% increase in cider duty which was subsequently cancelled after the General Election.

Given the huge disparities in duty rates that currently exist between countries, and the many precedents for altering the relative duty rates between different categories, I can’t really see that this suggestion has a leg to stand on. Also, as I pointed out here, prior to the Budget the level of duty paid per unit of alcohol on wine and beer was pretty much identical, so it’s hard to see how there was any discrimination in the tax system.

3 comments:

  1. A lot is often said about legality under EU law. Like domestic law much of this depends on someone having the resources to test single market regulations in the courts. Law & regulation may exist in statute, but who knows until it is tested and precedent set?

    Whether minimum pricing is legal/illegal because it is a protectionist measure against cheap french wine imports it is likely to be dragged through the courts for years & Alex Salmond has to be prepared to meet the cost because those affected have the resources and intention to do so.

    In the case of French duty it is clearly a protectionist measure but little old Belgium does not appear to wish to take on the French.

    The existing wide duty differentials are not an indication that is legal. If someone with the resources wanted to test a government they can.

    It may be academic anyway. The single market is a treaty of all its signatories. It only takes one country to apply capital flight prevention on leaving the Euro for the single market to cease to legally exist. Step forward Cyprus. or Greece. or Spain. or Portugal.

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  2. The phrase "divide and rule" springs to mind: the BBPA is now in opposition to the the WSTA and the SWA. I seem to remember budgets when the duty on beer was increased while that on scotch remained unchanged.

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  3. By EU law, you can't discriminate between different kinds of alcoholic bevarages per se, but you can discriminate between alcoholic beverages with different ABV.

    In theory. I practice, Cooking Lager is right.

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