The EU spirits sector is greatly concerned by the potential for legislative change to adversely impact on the sector. Spirits already face discrimination as a consequence of EU excise tax structures. They do not wish this situation to be made worse.
While the current review of Directive 92/83 contains elements that appear very valuable, it also seems to be an attempt to resolve problems caused by the minimum rates directive (92/84). Although the latter has proved difficult to amend / update, at the very least we hope the Commission can acknowledge the problems for the spirits sector that the different minimum tax rates cause. While all alcoholic beverages contain the same alcohol component (ethanol), the ethanol in wine can be subject to no tax, the ethanol in beer is subject to a minimum tax of Eur 187 / hlpa, while the ethanol in spirits is subject to a minimum rate of Eur 550 or, more commonly, Eur 1,000 / hlpa. So, while all alcoholic beverages compete, the tax structures distort that competition.
In concrete terms, we see the following issues with the inception impact assessment.
The difficulties seen with the classification of alcoholic beverages could be resolved by a non-discriminatory EU excise tax structure. While that, regrettably, does not seem to be an option, instead it seems efforts are being made to address the consequences of the minimum rates directive. This could, for example, amend the current product classification rules with the result that beverages deemed not to fit neatly into an existing category could be included in a new category under CN code 2208. Given that CN code 2208 is among the main determinants of what comprises a spirit drink, it could cause significant difficulties if this code was broadened formally to include beverages from fermented alcohol.
Another proposal is to permit reduced rates of tax for beverages that reduce their alcoholic strength. That option could never be used by spirits because each category is subject to a minimum alcoholic strength fixed by law. Other categories of alcoholic beverage that are not bound in this way already have much lower rates of tax: why then are yet further advantages being suggested? While health has been mentioned as a possible rationale for the proposal, a reduced strength beer (the most calorific alcoholic beverage) could still contain more calories than a comparable spirit beverage. We therefore strongly oppose this proposal.
The current reduced rates available to the beer sector are 1,000 times more generous than for spirits. There are options to redress this: one would be to provide a more meaningful threshold for small distillers; another might be to provide a reduced rate facility for all distilleries up to that more meaningful threshold. We hope too there can be improvements made to the current patchwork of reduced rates for certain spirits: these distort competition and in some cases are poorly enforced.
On a related issue, greater effort needs to be made at official level to address the problems from illicit / unrecorded alcohol; much of the difficulty here is a consequence of the high, in some cases excessive, and discriminatory rates of tax that are applied on spirits in EU member states; some, however, is a consequence of member states failing to collect revenue on spirits produced in their countries. Research to quantify the scale of the problem is a prerequisite to enable the right policy decisions to be taken to remedy the situation.
On a more positive note, we welcome the efforts as regards denatured alcohol. spiritsEUROPE is part of the EU-funded 'Food Integrity Project', which aims to improve food authenticity. We strongly support efforts to ensure consumers are protected from fake spirits.
We shall look forward to continuing to work with officials and the consultants to try to ensure the review improves, and does not worsen, the situation for our sector.
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