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ASH Daily News

6 November 2001


Headlines

EU may raise cigarette tax
HM Customs and EU legal threat

Full Text

EU may raise cigarette tax

European Union governments are set to agree on raising the minimum level of excise duties on cigarettes in a bid to narrow big gaps in tobacco tax levels and reduce incentives for fraud, EU officials said. Excise duty on tobacco accounts for up to 1.9% of the gross domestic product in some EU countries. But part of this revenue is lost to cigarette smuggling in high-tax countries such as Britain, where a packet of cigarettes can cost up to four times as much as in Spain.

The new EU legislation will reduce price differences between brands and lead to an overall increase in prices in Spain, Greece, Italy, Portugal and Luxembourg – the countries with the lowest taxes.

“It’s a useful step forward,” commission spokesman Jonathan Todd said. “It would narrow existing differences between member states on cigarette prices and bring up the levels of taxation on cigarettes.”

Source: Wall Street Journal Europe, 6 November 2001



HM Customs and EU legal threat

A trade magazine reports that the tobacco lobby and trade associations have voiced their support for HM Customs after the recent threat of legal action by the European Union.

The EU had hinted last month that HM Customs might face legal action unless it satisfactorily explained its rigid adherence to guidelines. The EU has indicated that it wants HM Customs not to take action against people who brought in more than 800 cigarettes in to the country simply because it was over the recommended guideline.

The Association of Convenience Stores (ACS) and the Tobacco Alliance have both stated that customs are faced with a tough job in fighting unprecedented levels of smuggling. Trevor Dixon, chief executive of the ACS said: “Customs have to be tough because they are fighting a battle against organised, hardened criminals.”

Unsurprisingly, the support for HM Customs was simply a prelude to a hackneyed call from the trade and tobacco sector on the government to use a reduction of tobacco tax as a primary tool in countering smuggling. A Tobacco Alliance spokesman said: “We fully support the legitimate efforts of Customs and Excise to stem the organised, criminal trafficking of non-duty paid tobacco, which has been directly fuelled by the Government’s refusal to bring the UK’s tobacco rates into line with the rest of Europe.”


Clive Bates, director of ASH, claimed the move was a cynical attempt by the EU to gain control over member country’s taxation policies. “If Britain can’t prevent smuggling then it can’t set its own tax rates. We think that the weakening of border controls is part of a wider Commission attempt to gain de facto jurisdiction over taxation. This sort of interference from the Commission is another example of free trade being put before health and welfare.”




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