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TAXATION/ALCOHOL : EXCISE DUTY: CZECH REPUBLIC BLOCKS FINAL COMPROMISE.

The raising of minimum alcohol excise duties will have to wait. Although the latest compromise suggested by the European Commission managed to assuage Germany's last reservation (see Europolitics 3195), the Finnish EU Presidency finally had to face a veto imposed by the Czech Republic on 28 November. And, consequently, the negotiations have been suspended sine die.

For internal political reasons, Prague refuses to accept that only beer (and other intermediate alcohol products) be affected by an increase in excise duties and that wine be exempted from the rule. The Finnish negotiators did their best to explain to the Czechs that the increase in excise duty would not impact on Czech beer because Prague already imposes a rate higher than the proposed minimum, and that wine had been excluded from the negotiations since 1992 due to a compromise negotiated on behalf of wine producers. But it was not to be. Prague opted to go it alone against all the rest.

As for the next steps: the Commission has received a mandate from the Council to present a new report to assess the problems with alcohol excise duties. Speaking to the press, Laszlo Kovacs, the Taxation Commissioner, explained that the future report would include wine as a way of showing the Czech Republic that no doors had been closed. The French, for their part, recalled that 13 delegations currently support the principle of excluding wine from the scope of the negotiations. The situation is not promising and the dossier does not seem likely to be resolved rapidly. The Commission will now investigate further the idea of introducing (in the medium term) an indexation mechanism for excise duty rates so as to prevent any further deadlocks in the Council.

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Publication:European Report
Article Type:Brief article
Geographic Code:4E
Date:Nov 30, 2006
Words:286
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