The review of the excise structures directive has moved to a new phase, with consultants now working on a report that will help the Commission decide whether or not changes to the legislation should be proposed. For the spirits sector, the latest moves, regrettably, still seem unlikely to address the longstanding difficulties in this area.
With 2 directives governing the taxation of spirits in the EU, the current review only looks at the law that sets out the structures, i.e. how the different categories should be taxed. Almost all of the problems in the sector, however, come from the other directive, which sets minimum rates of tax for each category. Enacted over a quarter of a century ago, this law is well past its use-by date. While we fully recognise the political difficulties in securing agreement for its amendment, a useful first step would have been for the Commission, at least, to set out clearly that the minimum rates law is responsible for many of the problems that its review of the structures legislation is seeking to address.
That is not to say the review is without merit; the effort to resolve problems from denatured alcohol being diverted and used as illicit potable alcohol are very welcome. But even there the review does not seek to address the key factors behind the illicit market; excessive and discriminatory tax rates; leakage of home or small scale production into normal sales channels; Member States failing to control and collect taxes on commercial production. It would be very useful for the Commission to engage more actively in countering such illicit trade by, as a first step, engaging in an EU-wide study to quantify the scale of the problem and thereby enable appropriate policy measures to be taken to tackle it.
