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Tuesday, 7 June 2005 - Strasbourg OJ edition

30. Products subject to excise duty

  President. The next item is the report by Mr Rosati on behalf of the Committee on Economic and Monetary Affairs on the proposal for a Council directive amending Directive 92/12/EEC on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products (A6-0138/2005).


  Dariusz Rosati (PSE), rapporteur (PL) Mr President, today we are debating the proposal for a Council directive amending Articles 7, 8, 9 and 10 of Directive 92/12/EEC. I would remind the House that this Directive sets out general rules for the movement and holding of products that are subject to excise duty. The latter include mainly alcohol and tobacco products, but also liquid fuels. I would further note that Article 27 of the 1992 Directive imposed upon the Commission the duty of submitting a report to the Council on the impact and implementation of Articles 7, 8, 9 and 10 for the period up to 1997. For various reasons outlined by the Commission, the report on the implementation of these articles is only being debated today, after a delay of several years.

I would remind the House that Article 7 relates to the movement of products subject to excise duty by businesses for commercial purposes, Article 8 deals with the movement of products subject to excise duty by private individuals for their own use and Article 9 identifies the threshold at which excise duty becomes chargeable, as well as providing guide levels intended to help establish whether products which have been transported and which are subject to excise duty are intended for commercial or personal use. Finally, Article 10 gives details of the arrangements for charging excise duty and the country in which it is chargeable, as well as outlining the duties of tax representatives and the conditions of distance sales.

A great many doubts have been expressed regarding the provisions of these articles and their practical implementation, not only by private individuals, travellers and tourists, but also by businesses whose professional activities involve trade in and the movement of excisable products. This was the reason behind the Commission’s decision to propose a number of amendments to these four articles, and its primary aim was to comply with two basic principles.

Firstly, the Commission wished to ensure consistency in the implementation of one of the principles of the single market. I refer to the fact that excise duty on products moved for commercial purposes is to be paid in the country of destination, whereas excise duty on products moved by individuals who have purchased the products for their own use is to be levied in the country of origin.

The main aim of the Commission’s proposed amendments to Article 7 is therefore to define movement for commercial purposes. According to the definition given, movement for commercial purposes is considered to be any movement other than that for personal use. The other amendments to Article 7 serve to simplify the language and to incorporate more accurate terminology. Finally, the Commission has also proposed that Article 7 should include a clear indication of the person from whom excise duty is due.

One of the Commission’s amendments to Article 8 is of crucial importance. I refer to its proposal to remove the need for private individuals to transport products themselves in order to purchase the products in question. Instead, it will be possible for such individuals to place distance orders for products subject to excise duty, and to have them delivered to their place of residence. This also applies to what are known as gifts. It amounts to the introduction of a new principle, whereby movement of products for personal use is permitted not only when the products are transported by the individual in question, but also when they are transported by someone else on his behalf and at his expense.

The Commission is also proposing an important amendment to Article 9, namely that the quantitative limits, which to date have not been used as intended, should be abolished. Finally, the Commission is again proposing to amend Article 10 in such a way as to simplify the procedure.

Your rapporteur is of the opinion that any amendments to EU tax legislation should meet the following four criteria. Firstly, such amendments should reflect the thinking behind the single market, or in other words prevent discrimination. Secondly, they should be simple and transparent, so that they can be easily implemented. Thirdly, they should not cause any major disruption to the tax revenues of individual countries. Fourthly, they should also comply with health standards, provided that the individual Member States have relevant policies in place.

Your rapporteur believes that the Commission’s proposals are a step in the right direction in that they meet these criteria, and I therefore support all of its amendments. Parliament’s amendments primarily involve linguistic changes and improvements to the wording of individual provisions, as well as the incorporation of more accurate terminology. The House has also proposed that, when implementing these provisions, it should be the government authorities of the individual Member States that bear the burden of proof as to whether products are intended for commercial use. Under the current rules, it has all too often been the case that this burden has fallen on travellers, which we believe runs counter to the principles of the common market.

Without exception, the amendments we have made serve merely to improve the text and to provide what could be regarded as additional explanations. We support all the Commission’s amendments.


  László Kovács, Member of the Commission. Mr President, I should like to compliment the rapporteur, Mr Rosati, for his very clear and accurate analysis of the Commission proposal. I am very pleased to note that this report strongly supports the proposal of the Commission, the aim of which is to improve the functioning of the internal market in this area, both for citizens and for trade.

The proposal concerns the so-called ‘duty paid movements’ of excise products between Member States. While it is true that this type of intra-Community movement represents only a small proportion of the total intra-Community movements of excisable products, it must nevertheless be stressed that they mainly involve the European citizens and small and medium-sized companies.

For the European citizens the proposal aims to clarify the existing rules on the movement of goods from one Member State to another. Indeed, from the number of questions that the Commission receives daily on this issue, it clearly appears that the present rules, including the value of the ‘indicative limits’, cause some confusion. The proposal provides clarification on this issue and also enhances the possibilities for citizens to purchase duty-paid goods in the Member States of their choice, without having to declare those goods and pay duty on them in their own Member State. That will better align the system to the principles of a real internal market.

For goods moved for commercial purposes, the Commission proposes to maintain the basic principle that excise duty is payable in the Member State of destination, but to harmonise and simplify the procedures to be followed in that Member State. That will especially benefit small and medium-sized companies such as small wine traders who try to commercialise their products directly in other Member States. Today, the complex rules, which differ considerably between Member States, often deter those companies from doing business in other Member States.

Having regard to the importance of these issues for both citizens and traders, I hope that the positive tone of the report on the table today will be reflected in the vote tomorrow.


  Astrid Lulling, on behalf of the PPE-DE Group. (FR) Mr President, Commissioner, a large majority of my group should approve Mr Rosati’s report. I will not pretend, however, that the text voted for by the Committee on Economic and Monetary Affairs does not bring up a considerable number of difficulties. The expression of divergent interests has resulted in a rather shaky overall construction that contains certain inconsistencies, or even contradictions. Once again, we have seen how sensitive tax matters still are in the European Union. That is why it would be desirable for us to deal with them in strict compliance with the principles that we constantly preach.

The aim of the Commission’s proposal is to move towards the creation of the internal market, to promote the free movement of goods subject to excise duty and, finally, to respond to consumers by enabling them to make their purchases where they see fit. Under these conditions, I am surprised at the proposals of some of my fellow Members which would lead to a situation contrary to this logic, even returning to the situation that existed prior to 1993.

All of that is surprising and even worrying, but let us return to issues of principle. The logic of the internal market very clearly requires the end consumer to pay excise duty in the Member State of acquisition for products intended for private consumption. The existence of indicative limits laying down the maximum quantity of goods that can be transported from one Member State to another has become too rigid an obstacle, which has led the Commission to propose that it should be scrapped. That is a good suggestion, which the Committee on Economic and Monetary Affairs has unfortunately only followed partially, as it agrees in principle to the abolition of the limits, but refers, in an amendment, to those same limits as if they still existed.

Another example of inconsistency is that consumers will in future no longer be obliged to transport the products themselves to benefit from the rule of paying excise duty in the country of acquisition. This, too, represents considerable progress.

For distance sales, in contrast, it is the rule of the destination country that will continue to apply. The problem is that the dividing line between the two cases is not always clear and that the differences in their treatment will, I am sure, lead to a number of practical difficulties.

These considerations led me to propose some amendments that aim to remove the distinction between on-site sales and distance sales, but the Committee on Economic and Monetary Affairs did not go with me. I withdrew, because I was told that people were not ready and that it would involve a revolution. Nevertheless, it would simply be a case of sticking to the logic of the internal market. When European integration is proving to be an extremely complicated business – which is the situation we are now in – we cannot continue to encourage these inconsistencies because the citizens of Europe will judge them very harshly.


  Katerina Batzeli, on behalf of the PSE Group. – (EL) Mr President, Commissioner, the review of the current legislative framework is considered unavoidable, because we need to give European citizens and businesses clear, simplified laws.

Within the framework of this endeavour, I should like to emphasise two points which I consider could play a decisive role. Firstly, the present proposal for a directive deletes the reference to guide levels. These levels currently operate as single quantitative criteria for the national administrations of the Member States, when they are called on during the importation of products subject to excise to assess if products are or are not being held for commercial purposes. The abolition of guide levels will allow the national administrations to each adopt and apply their own criteria for assessing if products are or are not being held for commercial purposes. I consider that this is not in keeping with the principles of the internal market; on the contrary, it is a step backwards and a trend towards renationalisation. Maintaining guide levels or, where considered expedient, making provision for a study assessing the existing levels or their replacement with new guide levels, would in my view be the proper way forward.

Secondly, in order to harmonise national legislation and complete the internal market in all sectors, the present proposal for a directive will need to be considered as a transitional stage. The final objective will need to be appropriate preparation of national legislation and the internal market, in order to make it possible to harmonise the excise rates imposed by each Member State. This is also dictated by the freedom of the markets which governs the internal market.

I should like, however, to emphasise that the present directive does a great deal to improve the current system. In particular, the proposed provisions for improving the definitions of problematic concepts, such as commercial purpose, for including the definition of gifts in products on which excise is paid in the Member State of destination, for distance sales and, finally, for simplifying mechanisms, help in my view to resolve the current difficulties.

I should like to congratulate the rapporteur, Mr Rosati, on the integrated proposal which he has submitted on this matter and I think that the House should vote in favour of his report tomorrow.


  Margarita Starkevičiūtė, on behalf of the ALDE Group. (LT) The impression is that this perhaps technical question, which we are considering tonight, is in fact related to the problem of governmental policy. How can we combine state control with elements of a free market so as to create optimal conditions for economic development? Obviously, there is no simple answer; however, the experience of economic reforms implemented by us, the new members, is solid proof that the best results may be achieved when the problem is tackled in an integrated manner. I welcome the Commission’s proposal to repeal the indicative qualitative restrictions that are currently used by customs officers of the countries to determine the quantity of excise goods, as designated for personal use, which is permissible for importation, because such a procedure was contradictory to the essential requirements for the functioning of the common market. Indeed, how can we speak about the common market where individuals cannot import goods for their personal use? However, we should not forget the problems related to that matter.

First of all, the border countries, the Eastern border countries in particular, may face a rise in the flow of smuggled goods because the prices of spirits are much lower, both in Russia and Belarus, and the decision to fight against smuggling should not only focus on the strengthening of border protection. I urge the Commission to consider the necessity to reach agreements with neighbouring Eastern states so as to invite them to cooperate in our fight against smuggling.

The other problem we will encounter is the emergence of a small layer of merchants who will carry spirits from one country to another, for example, from Estonia where the excise duty is low, to Finland where the rate of the excise duty, and, respectively, the prices, are higher. The solution to this problem can hardly be found without an integrated approach towards the development of border regions and the creation of new jobs, so as to provide those people with an opportunity to earn their living in another way.

Thus, the economic measures that may contribute to the prevention of negative consequences are always available. Moreover, scientists have proved that the creation of a common market offers many more advantages; that is, GDP per capita in the European Union is higher by 20 percent owing to the presence of the common market. Hence, the advantages outweigh some problems that will emerge as the provisions of this decision are applied.


  Carl Schlyter, on behalf of the Verts/ALE Group. (SV) Mr President, the current minimum tax level for alcoholic drinks may be as low as zero, but other countries have chosen a higher tax level, mainly for health reasons.

Through unfair tax competition, unlimited movement imposes, in principle, upon all countries the policy applied by the Member State with the lowest tax. That would be the effect if we were to use the term ‘personal use’ without a time limitation. Because many alcoholic drinks may be stored for a lifetime, anyone can maintain that a lorry-load of such drinks is for personal use for the next 40 years, an option that would allow smugglers to go free. With a 120-day principle, account could be taken of, for example, birthday parties and of differences in levels of consumption between one country and another, but there would still be a legal reference to what might be regarded as reasonable in terms of personal use.

Voting down this amendment would, in practice, amount to a ban on all EU countries taking any measure whatsoever to combat tobacco and alcohol consumption for health reasons. That can scarcely be the intention of this House, because it would be in conflict with Article 30 of the Treaty.


  John Purvis (PPE-DE). Mr President, in his English Dictionary of 1755 Samuel Johnson defined excise as ‘a hateful tax’, and this tax and the way it is policed have become a hate object also for my Scottish constituents. They call me in tears to describe having their cars dismantled and their children terrified by customs officers. Okay, they are told, you can appeal to the courts – except that they cannot afford the courts against the customs’ bottomless pockets, and the burden of proof falls on them.

And what good do these exaggerated excise taxes do? They victimise honest retailers who cannot compete with personal purchases abroad, and the much more serious smuggling by organised crime which these taxes promote. They actually reduce overall tax revenue. And then there is the cost of all those extra customs inspectors.

And health. Do excise taxes really discourage smoking and drinking? No! Because the high level of personally imported and smuggled cigarettes and alcohol means that the actual cost of smoking and drinking is cheaper. Excise is not only hateful, it is also pointless, and high rates of excise tax which are out of line with those in other countries are even more pointless. All they do is distort shopping patterns absurdly and provide fertile ground for organised crime to flourish.

You, Mr Commissioner, are responsible for ensuring that the single European market functions properly, with free movement of goods and people; and clearly it does not function where there are large disparities in rates of excise duty. I, we, accept the concept of tax competition. Competition exists in income and corporate taxes, and rightly so. Why not also with excise? Perhaps it is time to abandon excise tax altogether and turn to value added tax as the only consumption tax.


  Zsolt László Becsey (PPE-DE). (HU) I agree that the amendments should include proposals to facilitate the movement of goods subject to excise duty, with a view to completing the internal market. I also support the fact that they place the burden of proof firmly on state authorities. I also consider it to be a step forward, that the present draft European Parliament resolution includes the quantitative guide levels for cross-border movements of goods subject to excise duty. The Union is not only deepening, however, it is also expanding. This means that differences in income and prices among the Member States will increase considerably for quite some time. On the EU’s eastern borders in particular, for example in Hungary’s neighbour Romania, it will be a long time before prices and incomes can jump to the level of those in higher-income neighbouring countries. Or, if they go ahead and raise them anyway, by means of administratively-set pricing and determining excise duty, then the share of illegal goods in circulation will be considerable. The obvious and catastrophic consequence of this would be movements of goods that are in fact intended for commercial purposes, but are declared as goods for private use when crossing national borders. The outcome of this would be the organised movement of goods under the carelessly applied slogan of internal market deepening. In Hungary, for example, not only would this mean a loss of government excise revenue; it would also harm the retail trade and producers of goods subject to excise duty in general.

My second comment relating to the report is, that it is difficult to square competition and the reduction of indirect taxation with the goal of increasing the role of indirect modes of taxation vis-à-vis direct taxation in the interests of enhancing our competitiveness. In my opinion, one of the lessons to be learned from the shock of last week’s referenda is that EU enlargement not only has long-term, beautiful, ideal effects; it also has immediate consequences for the real economy that can even be negative in the short term. It is unfair that our immediate neighbours should be made to bear these negative consequences alone, under the pretext of the omnipotence of the internal market. In cases where there are significant income and price differences, a transitional period should certainly be allowed, during which – even beyond 2009 as stipulated in the Accession Treaties in cases of proven necessity – more prosperous neighbouring countries can protect their internal market by keeping administratively set thresholds in place and continuing to monitor these thresholds.


  László Kovács, Member of the Commission. Mr President, I should like to make some comments on the amendments tabled. A number of the amendments modify or add recitals in order to emphasise the need to create an internal market for excise products also. I can assure you that is the very purpose of the Commission proposal. I feel that is already properly reflected in the recitals.

As to the amendment requesting that the Commission review and assess the ‘indicative limits’, I can only say that the Commission has assessed them in its report. That was the basis for its proposal and it has come to the conclusion that they should no longer appear in EU legislation. For this reason, and as the amendment proposed does not reinsert such indicative limits in the directive either, I do not see the need for the Commission to table another report on this issue.

Lastly, as regards the burden of proof that goods are for private use, the amendment in question seems to place that burden entirely on the administration. The Commission approach on this is somewhat different and would seem to be more neutral. It is for the citizen to provide any explanation or proof concerning the purpose of his transporting the goods in question. It is for the administration to decide on the basis of those elements. As such a decision can always be contested, it should be based on firm grounds.


  Othmar Karas (PPE-DE). (DE) Mr President, I believe that this debate does no more and no less than to highlight the many things that still remain to be done if we are to see a real internal market in every area of our lives.

On the one hand, we need to liberalise, simplify, harmonise or develop minimum standards; on the other, there is of course the need for built-in safeguards, particularly where health is concerned. We are engaged in progressively implementing both. I say ‘yes’ to the internal market, and every effort made towards strengthening it is in the interests of growth and employment and benefits the consumer.

The second point is one that came across clearly in the debate: this is not a codecision procedure. On every issue, this House must be consulted via the codecision procedure, and that includes issues of fiscal policy, and if we want to realise the internal market, we will have to give more attention to tax policy within the European Union. I am in favour of tax competition, but every competition has its limits. Even though excessively wide bands can result in gross distortions of competition, there is a need for action in tax policy too.

Thirdly, and in my capacity as chairman of the ‘small and medium-sized enterprises’ intergroup, I welcome the greater clarity that this proposal affords the public, not to mention – although the Commissioner did so – the simplified procedures that make for greater clarity and make matters easier for SMEs, and hence also for traders. Renewed efforts, though, are needed for we do not yet have an internal market, and so we have not yet heard the last of this proposal.


  President. The debate is closed.

The vote will take place on Wednesday at noon.

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