EU: Tax Commissioner proposes new starting point in beer tax debate

The European Union Tax Commissioner Laszlo Kovacs said November 20 he has proposed a compromise for member states in order to reach an agreement on an increase in the tax on beer, Dow Jones Newswires quoted November 21.

The previous proposal had been for the excise tax on beer and spirits to reflect inflation developments from a starting point of 1992 - representing a 31% hike.

Some member states, such as Germany, have balked at the increase, suggesting beer should be excluded from the excise tax rise on alcoholic beverages. Other states have disagreed.

Kovacs said he has proposed making the "date of departure" for the excise increase May 2004 - the time of E.U. enlargement. At the time, many new member states were required to increase the excise on alcoholic beverages in order to conform to E.U. norms, and they too have resisted a further increase.

"The compromise solution would be to take another starting point, the point of accession of the 10 new countries - that is a reasonable proposal but I don't know whether it can be acceptable," Kovacs said on the sidelines of a conference.

Adding the value of inflation from May 2004 to the present would only result in an excise tax increase of 4.5%.

"That would not force Germany to raise the price of beer," he added, since the German excise tax on beer is more than 4.5% above the minimum rate required, he added.

Kovacs said he had recently sent letters to finance ministers suggesting the compromise. He couldn't say whether an agreement could be reached ahead of the next informal meeting of finance and economic ministers November 28.

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