Beer tax rise off the menu as ministers fail to agree
Raising taxes on beer and other favourite tipples raised hackles among EU finance ministers today as talks ended without any deal on increasing tax rates in line with inflation.
Fearing a backlash from beer drinkers back home, Germany was one of several countries foaming over an EU plan to push up minimum tax rates on alcohol by 31%.
But efforts to find a compromise – by exempting prized national drinks – went flat when all 25 nations could not agree on the same deal. Ministers will return to the issue at their final meeting of the year on November 28.
Finnish Finance Minister Eero Heinaluoma, who led the talks, said beer was the main sticking point for an alcohol tax with four countries against the original plan. But when he offered to give beer an opt-out, seven other nations cried foul.
He did not name them but diplomats said the Czech Republic, Germany, Latvia and Lithuania opposed higher taxes on beer while other nations – including Spain, Portugal and Italy – wanted exemptions for their own drinks. A few others - Sweden and Denmark – did not like the idea of giving some drinks a free ride.
However, Heinaluoma said most countries were ready to back the plan.
Ministers need to vote unanimously for any changes to the tax law, so any veto would torpedo a proposal.
The European Commission – backed by the Nordic countries aiming to curb binge drinking – was asking EU finance ministers to update the EU-wide sales tax rates on all alcoholic drinks to take into account overall price increases since the levy last was recalculated in 1993.
Right now, there are different rates for different countries and different drinks. The EU minimum rates only affect a small number of countries because most are above that level.
The Commission says an increase is needed to prevent smuggling and to create a fair playing field across all 25 EU nations. It claims the real impact would be minor – just 1 euro cent per half-litre of beer.
This was too much for Germany, Deputy Finance Minister Thomas Mirow told reporters. He said Berlin was not against an alcohol tax in general, but it did not want to burden German beer drinkers – who already face a hike on standard sales tax starting in January – with an additional fee.
“Germany is not against alcohol tax but Germany is against beer becoming more expensive,” Mirow said. “We have made clear that because of the sales tax raise, we have no manoeuvring space.”
EU finance ministers also failed Tuesday to agree on higher limits for the amount of duty-free goods travellers can bring into the EU, again to update the rate set in 1994.
Heinaluoma said the first limit he asked them to back – €298 – was not enough for most and too much for some.
A compromise suggesting a €350 maximum, up from the current €190 limit, also fell apart when Britain demanded that non-euro nations be able to calculate their own rate of exchange.
France and the Netherlands opposed the proposal, saying it risked creating major differences among EU nations.
