ARCHIVES HISTORIQUES
DELACOMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (74)339
Vol.1974/0060

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COMMISSION OFTHEEURQFEÂN GO!MMUMTIE
COM(74)339Final
Brussels,22March1974
PROPOSAL FORATHIRDCOUNCILDIRECTIVE
ontaxesotherturnovertaxesaffectingthe
consumption ofmanufactured ,tobacco
(submittedtotheCouncilbytheCommission)
COM(74)339Final

Explanatory' Menorr.ndu.ii
Bac'rsround
TheMember States were obliged ,toapply ,by1July 1973 atthelatest ,
theCouncil Directive of19December 1972 ^"concerning taxes other than
turnover taxes which affect theconsumption ofmanufactured tobacco ?.In
addition tocertain veiy general principles applicable tothestructures
oftheexcise duty towhich theMember States aretosubject manufactured
tobacco ,theDirective laid down special provisions applicable over a
first stage ofharmonization ,extending from 1July 1973 to30June 1975•
Relating only tocigarettes ,those special provisions laid down thelimits
within which theratio between theproportional component andthespecific
component ofthemixed excise system prescribed therein mayvary .Itis
provided ,inparticular ,that thespecific component oftheexcise duty
maynotbeless than 5$n°rmore than 75%oftheaggregate amount ofthe
proportional excise duty andthe specific duty .TheDirective does not
determine the structure ofexcise duties onproducts other than cigarettes .
Apart from theUnited Kingdom andIreland ,whoareauthorized topostpone
implementation oftheDirective until 31December 1977 »"theMember States
have incorporated theprovisions ofthoDirective into their national law .
Thesituation forcigarettes canbetabulated asfollows :
Prance ... )
TXnl .. )Italy j
Belgium )
Netherlands
Luxembourg5%ofthetotal duty consists ofaspecific
amount percigarette
95^ofthetotal duty consists ofanadvalorem
rate applied totheretail selling price
OJNo,L303 ,31December 1972 ,pp.1-3»
•••/•••

-2-
Geraarf )75?'°f"thetotaldutyconsistsofaspecificamountper
<cigarette
Denmarkj25$ofthetotal.J-uty.consistsofanadvaloremrate
)appliedtotheretailsellingprice.
United)
Kingdomj
Ireland)theexcisedutyis10C$specific(underaderogation
granteduntil31December1977)*
Reasons
Withaviewtocontinuingtheharmonization after30June1975»the
Directiveprovides(Articlel(4)readwithArticle7(l))that,onthe
basisofArticles99a^d100oftheTreaty,theCouncilmust,before
1July1974jadoptaDirectivelayingdownthespecialcriteria
applicableduringthefollowingstageorstages.Thesecriteriawereto
enterintoforceon1July1975*
Asregardsexcisedutiesoncigarettes,whatismainlytobedoneisto,
fixanarrowerrangethanprovidedforinArticle8(2)oftheDirective
of19December1972fortheratiobetweenthespecificcomponentandthe
proportional componentoftheexciseduty.Indeedbythefinalstageof
harmonization ofthestructures,thisratioistobethesameinalltho
MemberStates. t
Anothersolutionmightconsistinabolishingtheintermediary stages'
betweenthestructurelaiddownbytheDirectiveof19December1972and
thedatewhenthefinalstructureisapplied,providedtheMemberStates
agreeinadvanceonthefinalstructure.
Thestructureoftheexcisedutyonothermanufactured productsstill
remainstobedetermined.
•••/••*

-3-
Inthocourse ofpreparatory work carried outbytheCommission ,itwas
found that ,fortechnical reasons andbefore proposals onthe
harmonization ofexcise structures areprepared ,theCouncil should first
bepresented with aproposal foraDirective defining thedifferent groups
ofmanufactured tobacco .This proposal ,entitled "Second Council
Directive ontaxes other than turnover taxes which affect theconsumption
ofmanufactured tobacco "isalso based onthe Council Directive of
19December 1972 .
Inthe co\irse ofthis preparatory work itwas also found that there were
still major differences ofopinion astothestructure ofthe exc.'.se duty
oncigarettes ,inparticular asregards theestablishment ofar..avrower
range ofratios between thespecific component andtheadvalor •■■•n
component oftheexcise duty ,since theultimate aim istoestablish a
single ratio which ,however ,isnotyetdefined .
Asaresult ofthemethod ofcalculating theadvalorem component ofthe
excise duty ,thevalue added taxandthetrading profit margin ,depending
ontheretail selling price andasaresult also oftheway inwhich each
ofthese elements ofthe cost price tends toincrease theothers ,any
difference ,however slight ,between these components cangive rise toa
not inconsiderable difference between theretail selling prices .The
fact that enlargement oftheCommunity hasfurther increased the
differences between market conditions has also made itmore difficult to
fixsatisfactory criteria forfurther harmonization oftaxes on
manufactured tobacco .Further consideration isnecessary before proposals
canbeputforward .Forthese reasons theCommission feels that itis
desirable andnecessary toextend thefirst stage ofharmonisation byone
year to30June 1976 •

ProposalforaThirdCouncilDirective
ontaxesotherthanturnovertaxesaffectingthe
consumption ofmanufactured ,tobacco
THECOUNCILOFTHEEUROPEANCOMIUNITIES ,
HavingregardtotheTreatyestablishing theEuropeanEconomicCommunity,
andinparticularArticles99and100thereof;
HavingregardtotheproposalfromtheCommission ;
Having'regardtotheOpinionoftheEuropeanParliament ;
HavingregardtotheOpinionoftheEconomicandSocialCommittee;
WhereastheCouncilDirectiveof19December1972^"ontaxesotherthan
turnovertaxeswhichaffecttheconsumption ofmanufactured tobacco,under
whichtheCouncilistoadopt,before30June1974»a-Directivelaying
downthespecialcriteriaapplicableafterthefirststagewhich,subject
toArticle1(4)»istocoveraperiodof12monthsfrom1July19735
Whereas,underArticle1(4)of"theDirectiveaforesaid,thetransitionfrom
onestageofharmonizattion tothenextmaybedeferred;
Whereas,ifspecialcriteriaapplicabletothefollowingstageorstages
aretobefixed,itisnecessary,fortechnicalreasons,fortheCouncil
toadopt,inaccordancewithArticle3(2)oftheDirective,onaproposal
fromtheCommission,thenecessaryprovisionsfordeterminingthewayin
whichmanufactured tobaccoshouldbedefinedandclassifiedingroups;
Whereastheseprovisionshavenowbeenincorporated inaproposalfromthe
Commission ;
OJNo.L303,31December1972,pp.1-3

Whereasthespecialcriteriaapplicableduringthefollowingstageor
stagesmust"bepreceded "byfurther -consideration of.theconditionsin
themarketinmanufactured tobaccosintheenlargedCommunity;
Whereasthefirststagethereforeneedstobeextendedby12months:
HASADOPTEDTHISDIRECTIVEi

-3-
Article1
Article7(1)of"theCouncilDirectiveof19December1972isamendedto
readasfollows:
"1.SubjecttoArticle1(4)»"thefirststaseofharmonization ofthe
structuresoftheexcisedutyonmanufactured tobaccoshallcover
aperiodof36monthsfrom1July1973"•
Article2
ThisDirectiveisaddressedtotheMemberStates.
DoneatBrussels,
FortheCouncil
ThePresident