COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 13.09.1995 
COM(95) 285 final 
COMMISSION REPORT TO THE COUNCIL AND EUROPEAN PARLIAMENT ON 
THE RATES OF DUTY LAID DOWN IN COUNCIL DIRECTIVE 92/79/EEC OF 
19 OCTOBER 1992 ON THE APPROXIMATION OF TAXES ON CIGARETTES, 
COUNCIL DDIECUVE 92/80/EEC OF 19 OCTOBER 1992 ON THE 
APPROXIMATION OF TAXES ON MANUFACTURED TOBACCO OTHER THAN 
CIGARETTES, COUNCIL DDŒCTIVE 92/84/EEC OF 19 OCTOBER 1992 ON 
THE APPROXIMATION OF THE RATES OF EXCISE DUTY ON ALCOHOL AND 
ALCOHOLIC BEVERAGES AND COUNCIL DOŒCTPTE 92/82/EEC OF 
19 OCTOBER 1992 ON THE APPROXIMATION OF THE RATES OF 
EXCISE DUTIES ON MINERAL ODLS 
(Presented in accordance with Article 4 of Directive 92/79, 
Article 4 of Directive 92/80, Article 8 of Directive 92/84 and 
Article 10 of Directive 92/82) 

TABLE OF CONTENTS 
CHAPTER TITLE 
1. 
2. Summary 
The Community Excise System 
a) Background 
b) Evolution of the current system 
Scope of the Review 
a) The legislative requirements 
b) Operation of the Internal Market 
c) Real value of the rates of duty 
d) Wider Treaty aspects 
e) Need for further measures 
3. Cigarettes 
a) Review requirements 
b) Duty structure 
c) Real value of the rates of duty 
d) Functioning of the Internal Market 
e) Wider Treaty objectives 
f) Conclusions 
Other Manufactured Tobacco 
a) Review requirements 
b) Real value of the rates of duty 
c) Functioning of the Internal Market 
d) Wider Treaty objectives 
e) Conclusions 
Alcohol and Alcoholic Beverages 
a) Review requirements 
b) Real value of the rates of duty 
c) Competition between alcoholic drink categories 
d) Other aspects of the functioning of the Internal Market 
e) Wider Treaty objectives 
f) Conclusions 
6. Mineral Oils 
a) Review requirements 
b) Real value of the rates of duty 
c) Functioning of the Internal Market 
d) Wider Treaty objectives 
e) Conclusions 
Annexes: A - Details of revenue receipts 
B - Minimum rates 
C - Excise rate evolution since 1990 
D - Excise rate changes since 1 January 1993 
E - National currency/ecu exchange rates 
F - National Consumer Price Indices 
G - Cigarette excise rates 
SUMMARY 
Chapter 1 describes the evolution of the current Community Excise System. This 
system was introduced on 1 January 1993 and covers tobacco products, alcohol and 
alcoholic beverages and mineral oils. It provides common structures for taxation by 
Member States, with a system of minimum rates and harmonised procedures for holding 
and movement of excisable goods. 
The review requirement, which is laid down in a series of directives setting minimum 
rates of duty, is described in Chapter 2. The review must examine the rates of duty in 
the light of the functioning of the Internal Market, the real value of the duty rates and the 
wider objectives of the Treaty. It is noted in this chapter that the relevant issues vary 
considerably, and that there is a need for development of a longer-term excise policy. 
The overall conclusion is that action should be postponed pending a wider analysis of the 
range of relevant issues. 
Cigarettes are covered in Chapter 3. Here it is noted that the structure of cigarette 
excise duty must be examined, though the current view is that no adjustment is being 
recommended at this stage. 
Chapter 4 deals with other tobacco products. Here, it is noted that further consideration 
should be given to the relationship between tobacco products, not least because health 
arguments would support increased taxation of hand-rolling tobacco. 
Chapter 5 addresses alcohol and alcoholic beverages. Here it is noted that wine is 
subject to a zero rate. Adjustment of the positive rate without a corresponding measure 
for wine could lead to competitive distortions. On the other hand, introduction of a 
positive rate for wine may be ill-timed, given current reform of the CAP in this sector. 
Hence, the question of adjustment of minimum rates for alcohol products is deferred, 
pending further analysis and consultation. 
Mineral oils are dealt with in Chapter 6. Here again, is it noted that a wide range of 
potentially conflicting issues arise, particularly in the context of heating fuels, where the 
absence of a duty on some competing products raises similar competitive problems to 
that of wine in the alcohol sector. Thus again, action in this area is deferred pending 
further discussion and assessment. 
EXCISE DUTY RATES REVIEW 
1. THE COMMUNITY EXCISE SYSTEM 
a) Background 
1.1 Excise duties are long-standing taxes on consumption, generally applied to 
consumable goods such as tobacco and alcohol products, and mineral oils. They 
usually are applied as a specific amount of tax for a given quantity of product 
(though this is not always the case: for example, excise duty on cigarettes now 
consists of a specific element and an ad valorem element - i.e. a percentage of the 
value). A duty liability exists when the goods are produced or when they are 
imported into the Community. However, payment of the duty is normally 
suspended until such time as the goods are released for consumption. In line with 
this principle, the excise duty has always accrued to the Member State of 
consumption. 
1.2 Excise duties provide an important source of revenue for the Member States, 
representing between 2.3% and 6% of Gross Domestic Product (and between 5% 
and 16% of total tax receipts) - see Annex A. The rates of duty imposed by 
Member States have traditionally differed widely, reflecting varying national 
considerations and policies. 
1.3 Prior to the Internal Market, excisable goods could be held in an excise 
warehouse, and moved between warehouses in different Member States under 
suspension of duty, with frontier checks being used to control such movements. 
Such a system facilitated the principle of payment of duty in the Member State of 
consumption. Clearly, under Internal Market conditions, frontier checks would 
no longer be possible and a new means of controlling movements would be 
needed. 
b) Evolution of the current system 
1.4 In its 1985 White Paper on Completing the Internal Market,1 the Commission 
concluded that fully harmonised excise rates for the main categories of excisable 
goods, i.e. tobacco products, alcohol products and mineral oils were desirable for 
the completion of the Internal Market. Consequently, the original legal texts 
proposed by the Commission in 1987 suggested such a system.2 
1.5 The subsequent debate on those proposals led to a recognition by Council and the 
Commission that complete rate harmonisation was not necessary for the creation 
of the Internal Market. What was required, however, was a system which, on the 
1 COM(85) 310 Final 
2 - COM(87) 0325 of 4/8/87 modified by COM(87) 0325 final/2 (OJ n° C 251 of 19/9/87, p. 3) 
- COM(87) 0326 of 4/8/87 modified by COM(87) 0326 final/2 (OJ n° C 251 of 19/9/87, p. 4) 
- COM(87) 0327 of 4/8/87 modified by COM(87) 0327 final/2 (OJ n° C 262 of 1/10/87, p. 8) 
- COM(87) 0328 final of 4/8/87 modified by COM(87) 0328 final/2 modified by COM(87) 0328 
final/3 (OJ n° C 250 of 18/9/87, p. 4) 
one hand, gave Member States flexibility in setting their excise duty rates, but 
which on the other hand encouraged convergence of rates. In 1989, therefore, 
the Commission brought forward amended proposals with a view to introducing a 
greater degree of flexibility for Member States, particularly by replacing fixed 
rates with a system of minimum rates, rate bands and target rates.3 
1.6 The outcome of the negotiations on these revised proposals was a system of 
common minimum rates which, subject to certain agreed derogations, Member 
States are obliged to respect. In addition, Member States gave a political 
undertaking to treat the target rates proposed by the Commission as reference 
rates towards which they would endeavour to adjust their national rates. Details 
of the minimum rates are shown in Annex B. 
1.7 In deciding to adopt a system of minimum rates, the Council clearly felt that 
market forces should be the driving force behind rate approximation. It was also 
considered desirable that each Member State should be free, in setting rates for 
ranges of products which may be in competition with each other, to take account 
of the relative position of those products in that Member State. 
1.8 Thus, a Community-wide excise duty system was introduced on 1 January 1993, 
as one element of the creation of the Internal Market. In addition to the 
minimum rates, the system includes harmonised structures for charging the duty, 
and common rules for holding and movement of excisable goods. All of the rules 
are set out in a series of directives adopted during the course of 19924. 
1.9 The rules on holding and movement ensure that excisable goods can continue to 
move between Member States under a system of duty suspension. Traders 
wishing to move goods under this system must be registered in their Member 
State of establishment, and an administrative document must accompany the 
movement. In line with the principles of the Internal Market, increased freedom 
for private individuals to purchase duty-paid goods in the Member State of their 
- COM(89) 0525-01 Final of 19/12/89 (OJ n° C 12 of 18/1/90, p. 4) 
- COM(89) 0525-02 Final of 19/12/89 (OJ n° C 12 of 18/1/90, p. 8) 
- COM(89) 0526 Final of 19/12/89 (OJ n° C 16 of 23/1/90, p. 10) 
- COM(89) 0527 Final of 7/12/89 (OJ n° C 12 of 18/1/90, p. 12) 
- Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to 
excise duty and on the holding, movement and monitoring of such products (OJ n° L 76, 23/3/92, p. 1) 
as amended by Council Directive 92/108/EEC of 14 December 1992 (OJ n° L 390, 31/12/92, p. 124) 
- Council Directive 92/78/EEC of 19 October 1992 amending Directives 72/464/EEC and 79/32/EEC on 
taxes other than turnover taxes which are levied on the consumption of manufactured tobacco (OJ 
n°L316, 31/10/92, p. 5) 
- Council Directive 92/79/EEC of 19 October 1992 on the approximation of taxes on cigarettes (OJ 
n°L316, 31/10/92, p. 8) 
- Council Directive 92/80/EEC of 19 October 1992 on the approximation of taxes on manufactured 
tobacco other than cigarettes (OJ n° L 316, 31/10/92, p. 10) 
- Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise 
duties on mineral oils (OJ n° L 316, 31/10/92, p. 12) 
- Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on 
mineral oils (OJ n°L316, 31/10/92, p. 19) 
- Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise 
duties on alcohol and alcoholic beverages (OJ n° L 316, 31/10/92, p. 21) 
- Council Directive 92/84/EEC of 19 October 1992 on the approximation of the rates of excise duty on 
alcohol and ajcoholic beverages (OJ n° L 316, 31/10/92, p. 29) 
choice was also introduced, by way of abolition of the limited travellers' 
allowances. Various teething problems with the new system have been dealt with 
in two "simplification" directives adopted by the Council.5 
5 Council Directive 92/108/EEC of 14 December 1992 amending Directive 92/12/EEC (OJ n°°L 390, 
31/12/92, p 124) 
Council Directive 94/74/EEC (OJ ii°° L 365 of 31/12/94, p.°46) 
2. SCOPE OF THE REVIEW 
a) The legislative requirements 
2.1 The various directives concerning the approximation of rates each require that, 
every two years, Council shall examine the rates of duty laid down in those 
directives and, acting unanimously after consulting the European Parliament, 
shall adopt the necessary measures. In its examination, the Council must act on 
the basis of a report and, where appropriate, a proposal from the Commission. 
The report should take into account the proper functioning of the internal market, 
the real value of the rates of duty and the wider objectives of the Treaty. In 
addition, the directive on alcohol rates requires that account be taken of 
competition between the different categories of alcoholic beverages. 
2.2 Whilst the various issues to be considered in the review appear diverse, 
nonetheless, there is considerable interaction between them. This becomes 
* evident in the course of the analysis of those issues, where recurring observations 
arise. The various areas are considered at a general level in the following 
paragraphs, and more specifically in the sections of the report dealing with the 
different product groups. 
b) Operation of the Internal Market 
2.3 This topic can be examined at two different levels. Firstly, there is the issue of 
the effect, if any, which the removal of frontier controls and the introduction of 
the minimum rates have in terms of trade movement between Member States for 
any given product. This can largely be assessed in terms of the operation of the 
rules on holding and movement of excisable goods, combined with the effect of 
the actual duty rates applied in the Member States. The second issue is the 
impact of these factors in terms of possible shifts in purchasing patterns from one 
product to another competing product within the same broad product group, both 
within and between Member States. In this case, wider Treaty objectives can also 
have a major influence on the relationships between products. 
b. 1) Individual product level 
2.4 As regards operation on an individual product level, three types of transaction can 
arise. These are the commercial movement of duty-suspended goods, commercial 
transactions of duty-paid goods, and purchases by private individuals. 
Commercial movements of goods under suspension arrangements 
2.5 Directive 92/12/EEC introduced a movement system for intra-Community 
transactions involving goods subject to excise duty. This system allowed the 
continuation of a destination-based tax system which is compatible with the 
abolition of frontier controls. On the whole, it would appear that, as far as 
legitimate trade is concerned, this system operates relatively well despite the large 
differences in excise duty rates which still exist between Member States. Since 
goods move under duty suspension, whereby duty is payable in the Member State 
of destination, and at the rates applicable in that Member State, it is unlikely that 
rate differences lead to any significant distortion of choice or competition on the 
part of companies involved in trade at this level of the distribution chain. 
2.6 However, it is more difficult to assess the effect which the continued disparity in 
rates combined with the disappearance of frontier controls has on fraudulent 
activity in this area. Evidence available to the Commission from both trade and 
government sources does not indicate that, as yet, there has been significant 
increase in such fraud. This is not to say that fraud does not exist within the 
excise system: however, it is too early to know whether such fraud is on the 
increase. Excise rate levels, and the consequent perceived levels of revenue at 
risk, are important factors influencing control policy and, in particular, allocation 
of resources in Member States. It remains to be seen whether the levels and 
nature of national control measures and administrative cooperation between 
Member States will be. adequate to prevent widespread fraud, and the 
Commission will continue to monitor this situation closely. 
Commercial activities involving duty-paid goods 
2.7 Only a very small percentage of intra-Community commercial transactions take 
place outside the suspension arrangements. However, in some sectors (notably 
the wine trade) there is a small but nonetheless significant trade in goods 
dispatched direct to final consumers (known as distance selling). In such cases, 
duty is chargeable in the country of destination and the general procedures to 
enable such trade to take place are laid down in Directive 92/12/EEC. However, 
the detailed implementation of some of these procedures is left to Member States, 
and it appears that many operators involved in distance selling, especially small-
and medium-sized firms, are finding it difficult to accomplish the diverse and 
complex formalities required by the Member States, particularly where tax 
representatives are involved. These aspects have already been identified as a 
cause for concern in a document presented to the Council in 19936. 
2.8 The non-approximation of duty rates appears to be one of the reasons for the 
problems which have occurred in respect of distance selling arrangements and 
other commercial movements of goods outside the suspension arrangements since 
1 January 1993. This means that the authorities in higher-taxing countries are 
unable to rely upon the self-policing mechanism provided for in Directive 
92/12/EEC whereby the reimbursement of duty paid in the country of dispatch is 
conditional upon proof of payment in the country of destination. 
2.9 There is some evidence that this lack of a self-policing mechanism combined with 
the complexities of national procedures is tempting otherwise honest traders into 
trading illegally. This implies that there should be a greater approximation of 
rates and/or a simplification of procedures if the principle of taxation in the 
country of destination is to be maintained for distance sales. 
SEC(93) 2044, 14 December 1993 
Purchases by private individuals 
2.10 The Commission engaged a firm of consultants to study changes in cross-border 
shopping patterns since 1 January 1993.7 The consultants reported that cross-
border shopping was widespread prior to the introduction of the Internal Market 
and this continues to be the case. They also reported that tax differences were, 
and remain, one of the major factors giving rise to such cross-border shopping. 
(The most significant changes which have occurred since 1 January 1993 are the 
increases in quantities of beer, wine and hand-rolling tobacco which are being 
purchased by UK consumers in Belgium and France.) 
2.11 Clearly, under the border-control system applying prior to 1 January 1993, 
control was applied more easily to sea-crossing traffic than at land frontiers. 
Hence, given the wide rate differences, it is not surprising that there was a 
marked increase in purchases of excisable goods in other Member States by UK 
residents following removal of frontier controls and the abolition of the 
restrictions on the quantities of duty-paid products which consumers may buy in 
other Member States. Whilst most of this increased activity is perfectly 
legitimate under the new rules, and indeed is a positive consequence of the 
creation of the Internal Market, it is clear that some of the products being 
purchased by UK customers are, in fact, being resold, illegally, in the UK. A 
similar problem appears to be emerging in Ireland. 
2.12 Member States which experience large-scale tax-induced cross-border shopping 
appear to recognise that the only way to reduce such tax-induced distortions of 
competition is by narrowing the differences between their respective duty rates. 
However, the completion of the Internal Market has given rise to very little actual 
approximation of duty rates between neighbouring Member States. The major 
exception is the case of Denmark where significant reductions in the excise duty 
applied to beer and wine were made prior to 1 January 1993, to bring Danish 
rates closer to those applied in Germany. The result has been a dramatic 
reduction in the level of cross-border purchases of these products by Danish 
consumers. 
b.2) Product group level 
2.13 Turning to the functioning of the Internal Market within product groups, it is 
more difficult to get a clear assessment of the situation. There are many 
diverging views as to what constitutes a valid set of competitive relationships 
between individual products within a product group. The factors which influence 
consumer choice are widespread, and include fiscal policy. The express 
requirement to consider competition between the different categories of alcoholic 
beverages is evidence in itself of the importance of this aspect in the context of 
the excise rates review, though it is fair to expect that it would have been 
considered in any event, insofar as it is an important aspect of the functioning of 
the Internal Market, which must be considered in the review. 
"VAT and Excise Duties: Changes in Cross-Border Purchasing Patterns Following the Abolition of 
Fiscal Frontiers on 1 January 1993", prepared by Price Watcrhouse for the European Commission 
(DG XXI), September 1994 
10 
2.14 It would seem reasonable to take the current competitive situation within product 
groups as an appropriate starting point. Thus, from the Internal Market 
viewpoint, the focus should be on whether anything has happened, or is likely to 
happen, which might (arbitrarily) produce distortions in the competitive 
relationships which have existed during the first two years of operation of the 
Internal Market. What those actual relationships should be, and the extent, if 
any, to which they should be influenced by fiscal measures at Community level, 
is largely a matter for consideration under Wider Treaty objectives. 
2.15 As regards the existing relationships, one major factor emerges which shows 
marked differences between product groups. In some cases (tobacco products and 
motor fuels) all competing products are subject to excise duty, whereas in others 
(alcoholic beverages and heating fuels) some potentially competing products are 
either subject to a minimum rate of zero (wine) or are outside the scope of the 
duty altogether (natural gas, coal). In these circumstances, whilst not making a 
judgement as to what the competitive relationships within the various groups 
should be, it is nonetheless apparent that adjustment of positive minimum rates, 
without corresponding action on products which are not subject to positive rates, 
could produce competitive distortions. 
c) Real value of the rates of duty 
2.16 One of the other main elements to be considered, as identified in the relevant 
articles of the directives, is the real value of the rates of duty. This implies that 
account should be taken of the actual rate changes applied by Member States, and 
in particular the extent to which inflation is reflected in those changes. Inflation 
would normally be taken into account by national administrations when preparing 
the their budgetary plans. It would seem reasonable to assume that, all other 
things being equal, the rates applied by Member States generally would be 
increased to take account of inflation. 
2.17 An analysis of the actual rate evolution in Member States shows some interesting 
results. Firstly, it is clear that, for all products, there has been very little real 
approximation of rates. Furthermore, even where there has been some degree of 
approximation, the magnitude of the differences in rates between high taxing and 
low taxing Member States is still extremely large, particularly as when compared 
with the minimum rates themselves. Annex C contains details of the evolution of 
rates imposed by twelve Member States since 1990 on the main excisable 
products. Annex D shows the extent of change in those Member States' rates 
since January 1993, in both national rates and ecus. Annex E shows the extent of 
change in national currency vis-à-vis the ecu since October 1992. 
2.18 Equally interesting is the fact that, in some product groups, notably motor fuels, 
very large real increases, often well in excess of inflation, have been applied by 
Member States. However, for other groups, particularly alcoholic beverages and, 
to a lesser extent, heating fuels,, there has been a marked stagnation of national 
rates. Such stagnation has meant that even inflation-linked adjustments have not 
been applied to these products in several Member States. 
11 
2.19 The Commission notes that this latter phenomenon is most marked in sectors 
where certain products need not be subject to excise duty either because they are 
subject to a minimum rate of zero or because they are outside the scope of the 
duty, whilst other, potentially competing products, are subject to taxation. Thus, 
it has become clear that in some areas, Member States have been ready and 
willing to increase the real value of their national rates whereas in other areas 
there has been a general tendency to allow a decrease in real values by not 
increasing national rates. Either way, with the exception of tobacco duties (which 
include ad valorem elements) there has been very little straightforward "tracking" 
of inflation rates. 
2.20 According to the Eurostat Consumer Price Indices, the rate of inflation in 1993 
was 3.4%, whilst the figure for 1994 was 3.1%, giving a cumulative^total for the 
two year period (1993-1994) of 6.6%. Details of National Consumer Price 
Indices are contained in Annex F. 
d) Wider Treaty aspects 
2.21 Two general issues which apply to all categories of excise products are 
particularly relevant at present. Firstly, the Commission White paper on Growth, 
Competitiveness and Employment identifies increases in the rates of excise duties 
on all product groups as a means of funding reductions in statutory charges on 
labour (in addition to assisting in other policy areas). In the same way, the White 
Paper suggests extending the scope of the existing duty on mineral oils. 
2.22 Secondly, given the conditions to be fulfilled by Member States in the context of 
European Monetary Union, it is important that the Community's excise policy 
should be consistent with ensuring sufficient revenue receipts and sound 
economies at national level as well as with overall European Union policies. 
2.23 Besides these general issues, there are a number of more specific policy aspects 
which can be of varying relevance for the different excise product groups. 
Furthermore, such policies do not always pull in the same direction, in terms of 
their interconnection with excise policy. For mineral oils, the main concerns are 
in the energy, transport, environment and industry areas. For alcohol and 
tobacco products, the main preoccupations are health and agriculture. These 
aspects are considered in detail in the relevant sections of this report. It is clear 
that reconciling the various Treaty objectives with improvements in the 
functioning of the internal market raises potentially difficult issues which cannot 
always be resolved easily. 
e) Need for further measures 
2.24 There still appears to be general agreement amongst Member States on the need 
for further rate approximation. Traders, too, argue that greater rate 
approximation would help them to operate within the Internal Market. What is 
less clear, however, is the level or degree to which rate approximation should 
take place, and there has been little evidence of that approximation over the 
review period. It is probably fair to say that each Member State would wish that 
12 
other Member States should adjust their rates to bring them in line with its own 
national rates. 
2.25 It is already clear from the operation of the system over the past two years, and 
indeed in the light of the evolution of that system's introduction, that there is 
much room for development of a coherent Community excise policy for the 
future which, on the one hand, recognises the role of excise duties as national 
revenue earners, but on the other hand takes full account of the needs of the 
Internal Market and the wider objectives of the Treaty. Furthermore, the analysis 
in the preceding paragraphs shows that the range of relevant issues, and the actual 
practice in Member States, can vary significantly between product groups. It also 
shows that certain aspects of the excise system are obstructing the process of rate 
approximation. 
2.26 The Commission is of the view that detailed consultation with national 
administrations and with trade and other interest groups is necessary to allow 
more detailed analysis of all the relevant issues and the implications of possible 
consequent adjustments to the excise system. Thus, this report confines itself to 
analysis of the experience to date and, where appropriate, a highlighting of 
potential problem areas, without putting forward specific proposals at this stage. 
13 
3. CIGARETTES 
a) Review requirements 
3.1 Article 4 of Directive 92/79/EEC states: 
"Every two years and for the first time not later than 31 December 1994, the 
Council, acting on the basis of a report and, where appropriate, a proposal from 
the Commission, shall examine the overall minimum excise duty laid down in 
Article 2, the provisions of Article 3(2) and the structure of excise duties as 
defined in Article 10b of Directive 72/464/EEC and, acting unanimously after 
consulting the European Parliament, shall adopt the necessary measures. The 
report by the Commission and the examination by the Council shall take into 
account the proper functioning of the internal market and the wider objectives of 
the Treaty. " 
(Article 3(2) concerns a Portuguese derogation for certain cigarettes consumed in 
the Azores and Madeira). 
b) Duty structure 
3.2 Under Article 10b of Directive 72/464/EEC (as amended)8, each Member State's 
excise duty on cigarettes must consist of two parts, one ad valorem and one 
specific, with the specific element representing between 5% and 55% of the total 
tax burden (excise duty plus VAT) of the most popular price category of 
cigarettes sold in that Member State. Once these two parts have been established 
for this category of cigarettes, they are applied to cigarettes of all price 
categories. 
3.3 The relationship between the specific and ad valorem elements of the excise duty 
has been the subject of protracted debate over many years. Some Member States 
apply the minimum specific element, whereas others choose the maximum, with 
corresponding effects on the ad valorem elements of the duty. This contributes to 
the differences in retail prices. Notwithstanding that the Council has not agreed 
the final stage of harmonisation of the structure of excise duty on cigarettes, there 
is no evidence to suggest that any proposed change in the ratio of specific to ad 
valorem excise would be agreed at the current time. Nor does such a change 
appear to be essential at present in order to improve the functioning of the 
Internal Market. 
3.4 Consequently, this report does not propose to analyse the existing balance 
between specific and ad valorem excise duty, as defined in Article 10b of 
Directive 72/464/EEC. However, this is an issue which would merit examination 
in the course of the proposed consultation procedure. 
Council Directive 72/464/EEC on taxes other than turnover taxes which affect the consumption of 
manufactured tobacco, OJ n° L 303, 31/12/72, p. 1 
14 
c) Real value of the rates of duty 
3.5 The minimum rate of excise duty on cigarettes is set at 57% of the retail selling 
price (inclusive of all taxes) for cigarettes of the price category most in demand in 
each Member State (based on data established as at 1 January, each year). The 
fact that this minimum rate is expressed as a percentage of retail selling price 
means that it automatically takes account of inflation, and thus does not require 
adjustment in this context. 
3.6 The Commission notes that certain Member States have had to increase their tax 
levels substantially in order to comply with this minimum rate. It is also 
appropriate to note here that the transitional period granted to Spain to achieve a 
minimum rate of 57% ended on 31 December 1994. 
d) Functioning of the Internal Market 
3.7 High levels of fraud involving cigarettes have been reported in recent years. It has 
been noted, however, that the main source of this fraud has not been related directly 
to either the excise duty control system or the abolition of frontier controls in the 
Internal Market. Rather, it has been associated with a lack of rigour in Member 
States' application of the customs rules at the Union's external frontiers, and with 
difficulties in the functioning of the customs transit arrangements. In this context, 
the Commission has focussed attention on these problems in a Communication dated 
29 March 19959. In view of the Community own resources implications, the 
Commission has taken concrete steps towards tightening up transit rules, has set up 
a Task Force to combat fraud in the cigarette sector and continues to monitor the 
situation closely. 
3.8 The rates of duty applied by Member States to cigarettes are shown in Annex G. 
The apparent approximation of rates, when incidence is expressed in percentage 
terms, is deceptive, as very real differences still exist in the actual levels of duty 
applied to a given quantity of cigarettes. This is because of the combination of 
very wide differences in the pre-tax prices of cigarettes and widely varying levels 
of specific and ad valorem taxation. 
3.9 Given the position outlined above regarding the duty structure, the Commission 
does not consider it appropriate, at this stage, to bring forward measures aimed 
specifically at further rate approximation. At the same time, however, it has been 
noted that the existing rules, far from producing further rate approximation, could 
actually lead to increased rate divergence. The Commission considers that this 
could be contrary to development of the Internal Market and an issue which 
warrants examination. 
3.10 The retail price of cigarettes is made up of a number of elements such as the ex-
factory cost, the distributors' margins, the excise duty (specific element), the 
excise duty (ad valorem element), and value added tax. Since the incidence of 
the overall minimum excise duty is calculated as a percentage of the final selling 
price of cigarettes of the most popular price category, it follows that changes in 
Communication from the Commission: Fraud in the Transit procedure, solutions foreseen and 
perspectives for the future (COM(95) 108 final) 
15 
any single price component disturb the relationship between the overall excise 
duty and the retail selling price. 
3.11 This is a real issue in Member States where tax levels are at or just above the 
57% minimum rate. An increase in the ex-factory cost, for instance, can lead to 
an increase in retail price which would result in the overall excise falling below 
the 57% minimum. This then requires the Member State concerned to increase 
its excise duty in order to once again respect the 57% minimum. 
3.12 A number of Member States which already apply high tax policies in respect of 
cigarettes are nonetheless at or close to the 57% threshold (e.g. Belgium, 
Germany, France, Ireland, the Netherlands, Austria and Finland). It is difficult 
to accept that forced duty increases in countries with already high tax burdens was 
Council's deliberate intention as it is clearly at odds with an overall commitment 
to rate approximation, however gradual. Such an outcome would, over time, 
stimulate growing divergence of tax burdens in the Community (measured in cash 
terms), which in turn would lead to greater tax-driven differences in retail prices. 
The Commission does not consider that such effects are in the interest of the 
Internal Market. 
3.13 The only viable means of addressing such a problem would appear to be to allow 
Member States the option to refrain from making upward adjustments to their 
duty levels when there is an increase in the non-duty elements of the retail price, 
even if that were to mean that the overall duty incidence, expressed as a 
percentage of retail price, would fall below 57%. There would be no need, 
however, to vary the requirement in Member States to continue to respect the 
underlying rules regarding composition of the excise duty (i.e. the duty must be 
composed of both an ad valorem and specific element, and the latter must 
represent between 5 % and 55 % of the total tax burden for cigarettes of the most 
popular price category). Such an option could be limited to those Member States 
which, in absolute terms, apply relatively high levels of duty, in the interests of 
preventing further divergence. 
3.14 Given that this is a potential problem in the context of overall rate approximation, 
the Commission will continue to monitor the situation and will, if necessary, 
bring forward a proposal to address it. 
e) Wider Treaty objectives 
3.15 The main issue for cigarettes under this heading is health protection, particularly 
in the context of Article 3(o) of the Treaty ("the Community shall contribute to 
the attainment of a high-level of health protection") and Article 129 ("health 
protection requirements shall form a constituent part of the Community's other 
policies"). Over half a million people in the European Union died in 1994 from 
tobacco-related diseases. Moreover, tobacco-related morbidity greatly adds to 
health-care costs. Taxation of tobacco products is an obvious means not only of 
discouraging tobacco consumption, but also of providing a contribution to the 
funding of consequent health-care costs. The recent communication from the 
Commission concerning the fight against cancer in the context of the framework 
16 
for action in the field of public health10 states that "an upward harmonisation of 
tobacco prices across the Community" is among the actions which need to be 
continued and developed. 
3.16 This report is also required to examine the provisions of Article 3(2) of Directive 
92/79/EEC. These allow Portugal to apply a reduced rate, of up to 50% less than 
the normal minimum rate, in the case of cigarettes consumed in the Azores and 
Madeira and made by small-scale producers. 
3.17 This reduced rate is in accordance with a declaration annexed to the Maastricht 
Treaty11 which allows specific measures to be adopted to assist remote regions of 
the Community. In addition, it is compatible with the POSEIMA programme, 
which specifically allows certain favourable taxation arrangements for the Azores 
and Madeira. Finally, no particular problems relating to fraud or distortion of 
competition, arising from .the current arrangements, have been reported. 
f) Conclusions 
3.18 The Commission concludes that the duty structure for cigarettes should be 
examined further in the course of the consultation process referred to earlier. It 
also intends to pay close attention to the operation of the 57 % rule in high-taxing 
Member States, and will bring forward an appropriate proposal if this is found to 
be interfering with the process of rate approximation. 
10 Annex to COM(94) 83 Final 
11 Annex to Treaty on European Union - Declaration (N° 26) on the outermost regions of the Community 
17 
4. OTHER MANUFACTURED TOBACCO 
a) Review requirements 
4.1 Article 4 of Directive 92/80/EEC states: 
"Every two years and for the first time not later than 31 December 1994, the 
Council, acting on the basis of a report and, where appropriate, a proposal from 
the Commission, shall examine the rates of duty laid down herein and, acting 
unanimously after consulting the European Parliament, shall adopt the necessary 
measures. The report by the Commission and the examination by the Council 
shall take into account the proper functioning of the internal market, the real 
value of the rates of duty and the wider objectives of the Treaty. " 
4.2 The existing minimum rates of excise duty for tobacco products other than 
cigarettes are laid down in Article 3 of Directive 92/80/EEC. Member States 
may apply either an ad valorem duty based on the maximum retail selling price, 
or a specific duty, or a mixture of both, subject to certain speciried limits. 
b) Real value of the rates of duty 
4.3 The minimum rates of duty laid down in Article 3 of Directive 92/80/EEC are: 
Cigars and cigarillos: 5% of the retail selling price or ECU 7 per 1,000 
items or per kilogram; 
Hand-rolling tobacco: 30% of the retail selling price or ECU 20 per 
kilogram; 
Other smoking tobacco: 20% of the retail selling price or ECU 15 per 
kilogram 
4.4 As indicated above, the minimum rates for these products are expressed both in 
terms of a percentage of retail price and as a specific amount. All other 
considerations aside, it is noted that, over time and with inflationary growth, a 
gap will open up between these two factors, with the ad valorem rate 
automatically tracking changes in retail prices. Accordingly, inflation-based 
adjustment of the minimum rates expressed as specific amounts would be 
necessary to maintain the relationships established when the rates were set 
originally. However, before making proposals in this respect, the Commission 
considers that the question of the role of minimum rates should be examined in 
the proposed consultation process. 
4.5 As regards actual rate evolution, most Member States apply rates which rely 
heavily, if not exclusively, on an ad valorem element, thus ensuring that account 
is taken of inflation more or less automatically. Furthermore, those Member 
States who apply specific taxation have tended to adjust their duty levels in this 
regard. 
18 
c) Functioning of the Internal Market 
4.6 The United Kingdom and Ireland have experienced significant increases in the 
quantities of hand-rolled tobacco being brought back from other Member States 
(typically Belgium and the Netherlands) and ultimately being resold illegally on 
their domestic markets. This occurs because the difference in retail prices 
between the UK and Ireland on the one hand and their near neighbouring Member 
States is such that duty-paid products can be purchased in those neighbouring 
Member States and resold at a price well below the normal (duty-inclusive) retail 
price in the UK and Ireland. In the UK alone, these illegal sales have been 
estimated to account for around 5% of the total sales of hand-rolling tobacco. 
4.7 Differing tax levels is one of the factors behind this trend. It is also noteworthy, 
however, that there are large differences in the pre-tax prices of comparable 
hand-rolled tobacco products in the various Member States, with such prices in 
Ireland and the United Kingdom being more than twice as high as in, say, 
Belgium or the Netherlands. 
4.8 To the extent that this situation is giving rise to considerable fraud, it must be 
noted that its cause - and any potential solution - does not lie exclusively in the 
taxation domain. Indeed, any proposal to address this situation solely by 
adjustment of the minimum rate would require so large an increase as to be 
unrealistic. It would clearly be unacceptable to most Member States and in any 
event would cause major distortion of the balance between consumption of 
cigarettes and consumption of hand-rolled tobacco. 
4.9 At face value, therefore, it would appear that this is essentially a matter for high 
taxing Member States to tackle, through reducing their national rates and/or 
improved control measures. 
4.10 No major Internal Market problems have been reported for the other 
manufactured tobacco products, either in the context of cross-border shopping or 
large scale fraud. Furthermore, no particular concerns have been expressed by 
the relevant trade bodies. Finally, it is noted that there is very little demand/price 
cross elasticity between these products and other tobacco products. 
d) Wider Treaty objectives 
4.11 As for cigarettes, the most significant aspect of wider Community policies for 
other tobacco products is health protection. The risk to health from use of hand-
rolled tobacco in particular gives serious cause for concern. The lower price of 
such tobacco makes it an attractive alternative to manufactured cigarettes 
especially for young people. The absence of measured amounts of nicotine and 
tar for hand-rolled cigarettes and in many cases of a filter, are factors which can 
increase the risk of consuming such tobacco. 
4.12 On the other hand, adjustment of the minimum rate for hand-rolling tobacco in 
isolation could have implications for the competitive relationship between that 
product and cigarettes, and for associated employment levels. 
19 
4.13 The cigar and cigarillo sector is different from the cigarette and hand-rolled 
tobacco sectors. It essentially consists of small-scale artisanal production, often 
in rural areas and with low skill, high labour content. It covers a wide range of 
products, catering for a variety of tastes and price ranges, but has recorded a 
significant decline in consumption levels in recent years. Pipe tobacco also 
accounts for a very marginal part of tobacco consumption generally. It is a sector 
which is somewhat stagnant, and in fact is in decline in some Member States. 
e) Conclusions 
4.14 The Commission believes that, in the course of the consultation process, further 
consideration should be given to the appropriate taxation approach for hand-
rolling tobacco in the light of the health and competition concerns highlighted 
above. Attention should also be paid to the appropriate relationship between ad 
valorem and specific rates, when minima are expressed in both terms. 
20 
5. ALCOHOL AND ALCOHOLIC BEVERAGES 
a) Review requirements 
5.1 Article 8 of Directive 92/84/EEC states that: 
"Every two years and for the first time not later than 31 December 1994, the 
Council, acting on the basis of a report and, where appropriate, a proposal from 
the Commission, shall examine the rates of duty laid down herein and, acting 
unanimously after consulting the European Parliament, shall adopt the necessary 
measures. The report by the Commission and the consideration by the Council 
shall take into account the proper functioning of the internal market, competition 
between the different categories of alcoholic drinks, the real value of the rates of 
duty and the wider objectives of the Treaty. " 
5.2 It was agreed during the negotiations on Directive 92/84/EEC, to examine the 
possibility of introducing a control levy for wine. Furthermore, in an agreement 
between UK and Spain on intermediate products, which is annexed to Directive 
92/83/EEC, the Commission is recorded as saying special attention will be paid 
to these products under the review procedure. Both of these items are considered 
below. 
b) Real value of the rates of duty 
5.3 The minimum rates of duty for alcohol and alcoholic beverages are laid down in 
Directive 92/84/EEC as follows: 
Wine : ECU 0 (Article 5) 
Beer : ECU 0.748 per hectolitre/degree plato (Article 6) 
or ECU 1.87 per hectolitre/degree plato 
of alcohol of finished product 
Intermediate products: ECU 45 per hectolitre of product (Article 4) 
Spirits : ECU 550 per hectolitre of pure alcohol (Article 3) 
(if below ECU 1,000, cannot reduce, 
if above ECU 1,000, cannot go below ECU 1,000) 
5.4 It is noted that, in several relatively low-taxing Member States, particularly those 
which apply a zero rate to wine, the rates on alcoholic beverages generally have 
not been increased, and in some cases have reduced in real terms. Similarly, 
higher taxing Member States who also tax wine, but whose neighbouring Member 
States apply a zero rate, have also not increased their rates of excise on alcoholic 
drinks. In this context, it is significant that Austria, whose neighbours apply a 
zero rate to wine, reduced its wine excise to zero on joining the European Union. 
In general, there has been a marked stagnation in the rates of duty applied to 
alcoholic drinks. This would suggest that the zero rate for wine can limit the 
scope for rate adjustments on other alcohol products within the same Member 
State, and on all alcohol products in neighbouring Member States. 
21 
c) Competition between alcoholic drink categories 
5.5 In addition to the issues covered in the review of the rates applied to other 
excisable products, Article 8 of Directive 92/84/EEC introduces the express 
obligation to consider competition between different categories of alcoholic 
drinks. In fact, this topic would, in any event, fall to be considered in the 
context of the functioning of the Internal Market. Given the importance attached 
in the Directive to this particular issue, the Commission engaged an independent 
firm of consultants to assess the extent of such competition. 
5.6 The consultants found that there is indeed competition between alcoholic drinks 
categories. They concluded that "excise duty affects consumption of the different 
alcoholic beverages through their sensitivity to their specific price" and "excise 
duty can also affect the market shares of different categories of alcoholic beverage 
because of competition through prices". 
5.7 Whilst there are many different views on the degree of competition between wine 
and other alcoholic beverages, it would seem that it is not disputed that that 
competition does exist in at least some Member States, and for a sizeable 
percentage of inhabitants of the European Union. Furthermore, the EC Court of 
Justice, in case 170/78, found that beer was in competition with wine. 
5.8 However, provided that they do not breach the requirements of Article 95 of the 
Treaty and they respect the minimum rates, Member States are free, in principle, 
to decide on the extent to which they wish to take this into account in setting their 
national rates. 
5.9 Nevertheless, as indicated above, high-taxing Member States will increasingly be 
constrained in this freedom by the need to take account of rates applying to the 
same or equivalent products in other Member States. This complication is 
exacerbated by the fact that the competitive relationships between different 
alcoholic beverages vary significantly from one Member State to another, 
depending on factors such as taste, climate, tradition, etc. 
5.10 Thus, whilst it is relatively easy to establish that, in general terms, competition 
between drinks categories exists, it is more difficult to conclude as to how that 
competition factor should best be reflected in the Community's excise policy, or 
indeed whether such a policy can be developed to address the widely differing 
situations in the Member States. On the other hand, the continued existence of a 
zero rate for one alcoholic beverage means that adjustment of the minimum rates 
for other alcoholic beverages alone could induce competitive distortion. 
d) Other aspects of the functioning of the Internal Market 
5.11 In paragraph (ii) of the Agreement between the United Kingdom and Spain, 
which is annexed to Directive 92/83/EEC on the harmonisation of structures of 
excise duties on alcohol and alcoholic beverages, the Commission states that: "in 
the context of the regular reports foreseen in Article 8 of the Council Directive on 
the approximation of the rates of duty on alcohol and alcoholic beverages, it will 
pay special attention to the rates applied to these products [i.e. intermediate 
22 
products of a strength exceeding 15% abv and intermediate products of a strength 
not exceeding 15% abv] in order to take into account, in particular, the problem 
of competition between thé various categories of drinks concerned." 
5.12 The existing arrangements regarding intermediate products, as laid down in 
Article 18 of Directive 92/83/EEC, reflect a compromise between radically 
different situations in various Member States. They can result in widely different 
rates of duty applying to broadly similar products, particularly given that different 
rules can apply to intermediate products of a strength which exceeds 15% 
volume, and those whose strength does not exceed this level. However, it is clear 
that intermediate products cannot be considered in isolation from the overall 
question of competition in the alcoholic drinks sector. 
5.13 Three Member States (Denmark, Ireland and the United Kingdom) have applied 
rates significantly above the minimum for beer and wine since 1993. The 
differences between the rates applied in these three Member States and their 
neighbouring Member States can give rise to significant levels of cross-border 
purchasing, as confirmed by the study prepared for the Commission. The most 
documented incidents relate to purchases in France by residents of the United 
Kingdom. Reports have been commissioned by many other bodies, including the 
United Kingdom authorities and trade representative bodies, which also identify 
large-scale cross-border purchases of beer and, to a lesser extent, wine. 
5.14 Whilst the various reports do not always agree on the scale of the phenomenon, 
or on the extent to which excise rates influence it, it is universally accepted that 
the excise rate differences are a significant factor. Of course, it has to be noted 
that much of this phenomenon is a perfectly reasonable consequence of the 
Internal Market. To the extent that Member States are concerned about the 
deflection of purchases, significant scope exists for them to reduce the rate of 
duty for beer (and wine). This approach has already been adopted for beer by 
Denmark, with a consequent significant reduction in tax-induced cross-border 
shopping. In contrast, the French beer rate was increased significantly to comply 
with the current minimum. Furthermore, the French market has seen a reduction 
in overall beer sales since January 1993, despite the increased volume of 
purchases there by UK residents. 
5.15 In addition, the Commission notes that the non-tax components of beer retail 
prices differ significantly between Member States despite the fact that beer is 
generally produced in each Member State. Such differences are questionable in 
the context of a Single Market, and the Commission believes that close scrutiny is 
warranted in those Member States where non-tax price components are 
comparatively high. 
5.16 Although the same three Member States (Denmark, Ireland and the United 
Kingdom) apply rates well in excess of the minimum rate for spirits there is 
comparatively little evidence of significant cross-border shopping for these 
products. This is explained in the case of Denmark because of the maintenance 
of quantitative restrictions for travellers, and in the case of the UK and Ireland 
because a large proportion of spirits purchased by travellers returning to these 
23 
Member States are duty-free purchases made on ferries or planes and not duty-
paid purchases made in other Member States. 
5.17 The rates applied to alcoholic beverages by Sweden and Finland are even higher 
than those in Denmark, Ireland and the UK. However, both of these Member 
States negotiated derogations to allow them to impose restrictions on the 
quantities of alcoholic beverages which can be purchased abroad for personal 
consumption. It is too early to say what, if any, impact these factors will have on 
the levels of both legal and illegal cross-border trade into Finland and Sweden for 
these products. 
5.18 During the negotiations on Directive 92/84/EEC it was agreed to examine the 
possibility of introducing a control levy in those cases where, at 1 January 1994, 
a zero rate is applied to certain excise products. In the light of this, the 
Commission engaged a firm of consultants to examine the merits of a monitoring 
charge from a control viewpoint12. The consultants found that control procedures 
were being applied in the case of intra-Community movements of zero-rated 
wines. Such problems as exist in control of such movements also existed for 
movement of products subject to duty and were unlikely to be reduced, other than 
perhaps marginally, by the introduction of a monitoring charge. Accordingly, 
there would appear to be little merit in the introduction of a monitoring charge for 
the purposes of controlling intra-Community movements. 
e) Wider Treaty objectives 
5.19 The Community wine sector is the subject of reform of its common organisation 
of the market in the context of the Common Agricultural Policy. The objective of 
this reform is to get market balance in a situation of overproduction with, at the 
same time, declining consumption, particularly of table wines. In this context it 
has been argued that the notion of introducing a positive excise duty rate in 
producing Member States is, at worst, inappropriate and, at best, ill-timed. On 
the other hand, introduction of a positive minimum rate could be beneficial for 
CAP control purposes at national level. 
5.20 From the viewpoint of social and health policies, alcohol taxation is a potential 
means of discouraging excessive consumption. This can have positive 
consequences in terms of reduced problems associated with alcoholism and 
.alcohol abuse. In contrast, in some Member States, wine is considered a cultural 
product and an integral part of the traditional diet, possibly having positive effect 
on health when consumed in moderation. 
f) Conclusions 
5.21 The competitive position between different alcoholic drinks raises complex and 
often emotive issues. As indicated above, the fiscal treatment of alcoholic 
beverages generally cannot be divorced from the treatment of wine. Moreover, it 
cannot be considered in isolation from a number of other policy considerations. 
The Commission believes therefore that this issue should be examined further in 
12 "Intra-Community Trade in Zero-rated Products (wine and heating gas oil)", prepared by Van 
Hoist and Koppies for the European Commission (DGXXI), September 1994 
24 
the course of the proposed consultation process. This would mean that 
development of a coherent excise policy should follow expression of the views 
and arguments of all interested parties. In the meantime, those Member States 
who are at or near the existing minimum may retain their existing rates, and thus 
avoid any trade distortions which might be brought about by forced rate 
adjustments. 
25 
6. MINERAL OILS 
a) Review requirements 
6.1 Article 10 of Directive 92/82/EEC states: 
"Every two years and for the first time not later than 31 December 1994, the 
Council, acting on the basis of a report and, where appropriate, a proposal from 
the Commission, shall examine the rates of duty laid down herein and, acting 
unanimously after consulting the European Parliament, shall adopt the necessary 
measures. The report by the Commission and the examination by the Council 
shall take into account the proper functioning of the internal market, the real 
value of the rates of duty and the wider objectives of the Treaty. " 
6.2 Article 5 of the same directive requires the Commission to report on the 
effectiveness of a monitoring charge authorised for heating gas oil in certain Member 
States. Furthermore, At the time the Directive was adopted, it was agreed to review 
the situation regarding transitional rates which Luxembourg was authorised to apply 
until 31 December 1994. 
6.3 Arising from decisions taken under the procedure for reduced rates and exemptions 
provided by Article 8(4) of Directive 92/81/EEC, the Commission is also obliged to 
review the taxation of heavy fuel oil with a low sulphur content, and the relief 
applied by Italy in respect of mineral oils used for alumina production in Sardinia. 
b) Real value of the rates of duty 
6.4 The minimum rates of duty laid down in Directive 92/82/EEC are as follows: 
Petrol (leaded) 
Petrol (unleaded) 
Gas oil 
Propellant 
Art. 8 (3) uses 
Heating fuel 
Heavy fuel oil ECU 337 per 1,000 litres 
(ECU 292 in Luxembourg, to 31/12/94) 
ECU 287 per 1,000 litres 
(ECU 242 in Luxembourg, to 31/12/94) 
ECU 245 per 1,000 litres 
(ECU 195 in Luxembourg and Greece to 31/12/94) 
ECU 18 per 1,000 litres 
ECU 18 per 1,000 litres 
ECU 13 per 1,000 kg. (Article 3) 
(Article 4) 
(Article 5) 
Liquid petroleum gas and methane 
Propellant ECU 100 per 1,000 kg 
Art. 8 (3) uses ECU 36 per 1,000 kg 
Heating fuel ECU 0 per 1,000 kg (Article 6) 
(Article 7) 
Kerosene 
Propellant 
Art. 8 (3) uses 
Heating fuel ECU 245 per 1,000 litres 
ECU 18 per 1,000 litres 
ECU 0 per 1,000 litres (Article 8) 
26 
6.5 The national rates of excise duty on mineral oils used as motor fuels have been 
increased by large amounts in most Member States, with increases being as high as 
30% in some cases. Thus, Member States have been happy to apply rate increases 
exceeding inflation levels, with consequent increases in the real impact of their duties 
on motor fuels. In fact, for petrol (both leaded and unleaded) even the lowest taxing 
Member States now apply rates exceeding the minimum rates by about 20%. Whilst 
large increases have also been applied to diesel rates, the gap between the minimum 
and the lowest national rates is somewhat smaller than for petrol. These large rate 
increases appear to have been possible due to a combination of low oil prices (in real 
terms) plus the relatively low price elasticity of motor fuel, which has meant that 
Member States have been able to secure substantially increased revenue yields 
without any significant reductions in consumption levels. 
6.6 In contrast, for heating fuels the level of increase applied has been much lower 
generally. In fact, over half the Member States have not adjusted their rates since 1 
January 1993. Thus, for heating fuels, duty levels and consequent receipts have 
stagnated and, in some cases, reduced, in real terms. One possible explanatory 
factor for this phenomenon would appear to be the fact that certain directly 
competing products, notably natural gas and coal, are outside the scope of the 
Community excise duty and that, in this sector, Member States have been somewhat 
prevented from exploiting the same factors which have led to increased revenue 
yields from motor fuels. 
6.7 Article 5 of Directive 92/82/EEC allows Belgium and Luxembourg to apply a zero 
rate to heating gas oil, provided that they levy a monitoring charge of ECU 5 per 
1,000 litres. The Commission notes that this generates revenue receipts in those 
Member States, and thus it can, in practice, have the same effect as a tax or duty. 
c) Functioning of the Internal Market 
6.8 All motor fuels are subject to "excise duty, by virtue of Article 2(3) of Directive 
92/81/EEC which states that "any product intended for use, offered for sale or used 
as motor fuel shall be taxed as motor fuel." This, at least, means that all 
competing products are within the scope of excise duty, and therefore adjustment of 
minimum rates can take place without automatically creating competitive distortions. 
6.9 Significant differences exist, both at minimum rate and national rate level, between 
the treatment of different motor fuels. This can lead to complaints from those 
sectors of the trade which perceive themselves as unfairly treated. However, a wide 
range of policy objectives can be relevant in determining how the relative tax 
burdens of different motor fuels should be set. 
6.10 Wide rate differences also exist between national rates for each product. This does 
result in high levels of cross-border shopping in some areas, mainly by residents of 
border areas and passing motorists (hauliers, tourists etc.). This would seem to be a 
legitimate consequence of the internal market.. 
6.11 It was agreed during the negotiations on Directive 92/82/EEC that the 
Commission should review the situation regarding the rates in Luxembourg and 
the neighbouring countries at the end of the transitional period, taking into 
account the importance of the relative retail prices for the Member States in 
27 
question. At the time it was acknowledged that special measures may be 
necessitated by the risk of displacement of purchases. 
6.12 According to the study prepared for the Commission, significant levels of cross-
border purchasing of petrol and diesel continue to occur in Luxembourg. The 
study does acknowledge however that hard data was difficult to obtain, and that 
the gradual raising of rates by Luxembourg should reduce the phenomenon. In 
fact, the Luxembourg rates are still somewhat lower than their neighbours', 
though it must be acknowledged that they are now above the existing minima 
(and, in the case of petrol, well above the minima) . 
6.13 In the heating fuel area, a major problem exists in that some heating fuels are 
subject to excise duty, whereas other, directly competing products (e.g. natural 
gas, coal) are not. This raises two questions from a competition viewpoint. The 
first is a general question, as to what should be the appropriate competitive 
relationship between the various heating fuels. This can only be assessed in the 
light of a wide range of relevant policies and objectives which can influence fiscal 
treatment of fuels. The second, more specific issue, is the problem of how to 
adjust the minimum rates of duty without inadvertently influencing the 
competitive situation. The Commission's Green Paper on Energy Policy confirms 
that increasing the minimum rates of duty on heating fuels currently subject to 
excise duty would distort their competitive relationships with products outside the 
scope of the duty. 
6.14 The marked contrast between the adjustments made by Member States to rates on 
motor fuels and heating fuels would appear to confirm, as indicated above, that 
exclusion of certain products from the duty base limits the freedom to adjust 
national rates. It would also suggest that scope for adjustment of the minimum 
rates is similarly limited. 
6.15 As regards fraudulent activity in the heating fuel sector, there is evidence to 
suggest that the low retail price of heating gas oil in Belgium and Luxembourg 
(which is at least partially due to the application of the monitoring charge in lieu 
of a "true" excise duty) is producing trade distortion, with diversion of orders 
from France and, to a lesser extent, Germany. Moreover, significant fraud has 
been reported in France as a result of deliveries there of heating gas oil taxed at 
Belgian rates. 
6.16 As indicated above, the Commission engaged a firm of consultants to study the 
relative merits of zero rates and monitoring charges for excisable goods. The 
consultants concluded that, as a tool to aid control of heating gas oil, the 
monitoring charge serves no purpose. Firstly, strong control measures have 
traditionally applied to heating gas oil, in view of the risk of diversion within 
national markets, to use as a propellant. (Indeed, ironically, because of this risk 
of substitution, it appears that the lower the charge the greater the need for 
control.) Secondly, no significant difference was found by the consultants in the 
control of products subject to a monitoring charge and those subject to a zero rate, 
where both product categories are subject to control and movement formalities. 
28 
d) Wider Treaty objectives 
6.17 At a general level, environmental policy would favour a substantial increase in the 
level of excise duties on mineral oils and extension of the duty to products 
currently not covered. The main motivations are a reduction in the levels of 
harmful emissions and the internalisation of external costs. In the case of 
emissions, clearly any initiative aimed at reducing carbon dioxide emission.levels 
would be welcome. However, reducing levels of other potentially harmful 
emissions, including NOx, CO, hydrocarbons, S02, and particulates, is also an 
objective. 
6.18 Internalisation of external costs is a key issue of energy policy. The recent Green 
Paper on Energy Policy has highlighted this point, and has identified excise duties 
as having a potential role to play in this process. Diversification of energy 
sources, reducing dependency on imports from outside the European Union are 
also considered important. Finally, encouragement of greater energy efficiency is 
considered to be desirable. This would apply to both fuels themselves and the 
equipment in which they are used. 
6.19 Energy and environmental concerns came together in the form of the 
Commission's proposal for a carbon/energy tax13, which was not adopted by the 
Council. At the European Council meeting in Essen in December 1994, it was 
concluded that the possibility of introducing a form of carbon/energy taxation 
with some degree of optionality should be explored. The Commission has since 
presented an amended proposal to Council. Similarly, energy, environmental and 
agricultural concerns led to the Commission putting forward a proposal for a 
reduced rate throughout the Community for biofuels. Although this proposal has 
met with resistance in the Council, the Commission remains committed to securing 
its adoption. 
6.20 Once again, internalising external costs is a key objective of transport policy. A 
reduction of traffic congestion on the roads is also an important element of current 
transport policy: this implies encouraging a shift of traffic from roads to other modes 
of transport. A significant increase in the excise rates for road fuels, in addition to 
development of the capacity of other transport modes, have been put forward as 
valid means of seeking to attain these objectives. 
6.21 From an industrial policy viewpoint, the main preoccupation is competitivity. This 
applies both within the European Community, and between European industries and 
those in third countries. In the automobile sector, there is a concern that higher fuel 
costs might lead to a downturn in new car sales in the Community, which could be 
detrimental to that sector. They would thus be concerned to see a cost/efficiency 
analysis of any future tax measures introduced for specific purposes in the motor fuel 
area. The differential between petrol and diesel also needs careful consideration, as 
Europe has established a world leadership in diesel-engined véhicules. 
6.22 Notwithstanding the fact that development of the excise system may complement 
other Community policies, care must also be taken to try to avoid and/or eliminate 
unwarranted economic distortions arising from differential taxation of energy 
13 COM (92) 226 final, OJ n° C 196 of 23.08.1992, p.l 
29 
products across uses, activities or sectors. An optimal taxation system also means 
that taxes on energy products cannot be considered in isolation from the wider tax 
system and its impact on the allocation of resources in the economy as a whole. 
6.23 The Commission's White Paper on Growth, Competitiveness and Employment, and 
the related conclusions of the European Council held in Brussels in December 1993, 
identify increases in the rates of excise duty on energy products, plus enlargement of 
the scope of the duty, as a means of funding reductions in statutory charges on 
labour. 
6.24 The wider policy areas indicated above are relevant in the context of the overall 
approach to be adopted regarding excise duty on mineral oils. Indeed, a closer 
coordination of all these policies must be a key element in developing the excise duty 
system. However, there are also a number of specific considerations, applicable 
to particular products, which should be examined. The initial source of concern 
in these areas is most often located in environmental policy, though again there 
can be interaction with other Community objectives. The specific issues which 
warrant examination are the differential treatment of leaded and unleaded petrol, 
the extent of the difference between petrol and diesel taxation and, the varying 
treatment of heavy fuel oil depending upon its sulphur content (the latter on the 
basis of the undertaking referred to earlier). 
6.25 As regards the differential treatment of leaded and unleaded petrol, there is an 
ECU 50 per 1,000 litres differential between the minimum rates for these 
products at present. Furthermore, Member States are obliged, under Article 4 of 
Directive 92/82/EEC, to apply a lower rate of duty to unleaded petrol than to 
leaded petrol. At the time the directive was adopted, Member States agreed to be 
guided by the objective of maintaining a differential in favour of unleaded petrol 
of ECU 50 per 1,000 litres, though this differential is not legally binding on the 
Member States. The Commission notes that this rate differential of ECU 50 is 
not respected in sevefal Member States. 
6.26 Introduction of the differential in favour of unleaded petrol was part of an overall 
strategy to encourage greater use of this product instead of leaded petrol. 
Considerable success has been achieved as a result of this strategy. In parallel, in 
application of Directive 88/76/EEC14 on measures to be taken against air pollution 
by motor véhicules, new cars must use unleaded petrol since 1 October 1990. 
Furthermore, consumption patterns have changed to the extent that unleaded 
petrol now accounts for more than 50% of overall petrol purchases. This reflects 
not only the technical characteristics of new cars, but also a major change in 
public opinion and attitude. 
6.27 In the circumstances, it would now seem appropriate that unleaded petrol should 
be the fuel to which a standard minimum excise rate be applied. Any rate 
differential between leaded and unleaded petrol could then be presented as a penal 
upward adjustment on leaded petrol. Furthermore, there would be merit in 
making it obligatory for Member States to apply to leaded petrol a higher rate 
than that which they apply to unleaded petrol. 
14 Council Directive 88/76/EEC of 3 December 1987 (OJ No L 36, 09.02.88). 
30 
6.28 There is a large gap between petrol and diesel rates, both in minimum terms and 
at national rate level. This gap has an origin in the use of diesel as a professional 
fuel for road haulage, buses, taxis etc.. A narrowing of the gap would appear to 
be justified on grounds of transport policy, where a shift from road haulage to 
train and waterways freight is advocated. For cars, a narrowing of the gap would 
also seem possible due to the fact that diesel is more economical than petrol, in 
terms of kilometres per litre, which is already an incentive to prefer diesel-
powered véhicules. 
6.29 In the heavy fuel oil sector, there may be merit, for environmental reasons, in 
introducing a fiscal advantage for fuel oil with a comparatively low sulphur 
content. On the other hand, energy policy would suggest that such a measure 
should not be implemented independently of other considerations: for exarrtple, 
some industries have installed special equipment to counter the effect of using fuel 
oil with a high sulphur content. 
e) Conclusions 
6.30 Given the various arguments and concerns outlined above, the Commission notes 
that, in general, different considerations arise in the motor fuel and heating fuel 
sectors. 
6.31 For heating fuels, the Commission notes that there are strong arguments for 
increasing the minimum rates, but that this implies a need to extend the scope of the 
duty to products which are not covered at present. This in turn means resolving 
difficulties arising from wider Treaty objectives, insofar as it requires a balanced 
judgement as to the correct competitive relationship between various products. 
Whilst, in principle, it may be valid to apply an excise duty to natural gas, it may 
equally be valid, nonetheless, to give it some fiscal advantage over other fuels. 
These are issues which will need detailed consideration before final positions can be 
adopted. Accordingly, the Commission concludes that these issues should be 
covered in the wide-ranging consultation process described previously. Such an 
approach would also enable account to be taken of discussions on the Green Paper 
on Energy Policy, which is expected to lead to a White Paper by the end of 1995 and 
of the role which excise duties can play in furthering environmental policies at a 
Community level. 
6.32 As regards the specific review requirements arising from Council Decision 
93/697/EEC, the Commission is of the view that the specific requirement to review 
the treatment of heavy fuel oil by reference to sulphur content should be covered in 
the overall review of the treatment of heating fuels, following the consultation 
process. As regards the relief for mineral oils used in the production of alumina in 
Sardinia, the Commission believes that this matter would best be reviewed in the 
context of the overall review, as provided for under Article 8 (6) of that directive, 
covering exemptions and reduced rates granted under article 8 (4) of Directive 
92/81/EEC. In the meanwhile, the Commission considers that the Council should 
look favourably upon requests to renew these particular derogations until 
31 December 1996. Furthermore, in view of the interest shown by Member States, 
the Commission believes that an overall review as provided for under article 8(7) of 
the same directive covering exemptions under paragraphs 1(b) and 2(b) of article 8 
could usefully take place at the same time. 
31 
6.33 Given the close links between the minimum rates for heating fuels and for fuels used 
in accordance with Article 8(3) of Directive 92/81/EEC, it is equally recommended 
that action be deferred in this area until after the consultation process. 
6.34 In the motor fuel area, where all competing products are subject to duty, the 
Commission believes that there are a number of aspects which need to be analysed 
further, including in particular the relationship between petrol and diesel, and the 
appropriate difference in fiscal treatment of leaded and unleaded petrol. Such a 
review of the treatment of motor fuels should be considered in the context of the 
consultation process, with a view to developing a more coherent overall strategy for 
the future. 
6.35 The Commission concludes that, in any future proposals in this area, the opportunity 
should be taken to ensure that unleaded petrol be presented as the fuel to which à 
standard minimum excise rate be applied. Any rate differential between leaded 
and unleaded petrol which might be judged appropriate should then be presented 
as a penal upward adjustment on leaded petrol. 
6.36 The Commission notes that all Member States have increased their national rates 
of duty on motor fuels without the pressure of increased minimum rates. Indeed, 
as noted above, an increase of 20% in the minimum rate for unleaded petrol 
would be necessary, simply to keep pace with national rates for this product. On 
the other hand, as all Member States have increased their rates, very little rate 
approximation has occurred. Rather than simply proposing an increase of the 
minimum rates at this stage, the Commission believes that the issue needs to be 
examined to see whether other, complementary measures might be needed to 
assist the approximation process. 
32 
ANNEX A 
EXCISE RECEIPTS AS A % OF GROSS DOMESTIC PRODUCT 
(1992) 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United 
Kingdom Excise Receipts 
as % of GDP 
2.3% 
4.1% 
2.8% 
4.4% 
2.5% 
2.6% 
6.0% 
3.7% 
4.5% 
2.7% 
4.5% 
3.7% Total Tax Receipts 
as % of GDP 
45.7% 
48.8% 
42.5% 
41.1% 
36.8% 
43.7% 
37.1,% 
41.9% 
49.2% 
47.8% 
35.7% 
34.0% Excise as % 
of Total Tax | 
5.0% 
8.4% 
6.6% 
10.7% 
6.8% 
5.9% 
16.2% 
8.8% 
9.1% 
5.6% 
12.6% 
10.9% 
33 
ANNEX B 
MINIMUM RATES OF EXCISE DUTY 
PRODUCT MINIMUM RATE 
TOBACCO PRODUCTS 
Cigarettes Combination of specific and ad valorem 
elements, the minimum incidence of which 
should not be less than 57% of retail selling 
price (most popular price category) 
Fine cut smoking tobacco for rolling 30% of retail selling price or ECU 20 per 
cigarettes kilogram 
Cigars & cigarillos 5% of retail selling price or ECU 7 per 1,000 
items or per kilogram 
Other smoking tobacco 20% of retail selling price or ECU 15 per 
. . kilogram 
ALCOHOL PRODUCTS 
Wine ECU 0 per hectolitre of product 
(still & sparkling) 
Intermediate products ECU 45 per hectolitre of product 
Beer ECU 0.748 per hectolitre/degree plato or. 
ECU 1.87 per hectolitre/degree of alcohol of 
finished product 
Spirits ECU 550 per hectolitre of pure alcohol 
(ECU 1000 for Member States above this 
I limit) 
MINERAL OIL PRODUCTS 
Motor fuels 
Unleaded petrol ECU 287 per 1,000 litres 
Leaded petrol ECU 337 per 1,000 litres 
Diesel ECU 245 per 1,000 litres 
Kerosene ECU 245 per 1,000 litres 
LPG + Methane ECU 100 per 1,000 kg 
Heating fuels 
Gas oil ECU 18C5)1 per 1,000 litres 
Kerosene ECU 0 per 1,000 litres 
LPG + Methane ECU 0 per 1,000 kg 
Heavy fuel oil ECU 13 per 1,000 kg 
Art. 8(3) uses 
Gas oil ECU 18 per 1,000 litres 
Kerosene ECU 18 per 1,000 kg 
LPG + Methane | ECU 36 per 1,000 kg 
Monitoring charge of ECU 5 per 1,000 litres applicable for Belgium and Luxembourg. 
EXCISE DUTY RATES 
STILL WINE (per hectolitre 
Ecus 
300 
250 1 
200 
150 
100 -
50 -
0 11 
.3 m m 
B DK "T~ 
D M"l V7i 
EL ES RL rm 
NL UK 
1-1-1990 
1-1-1993 1-1-1991 
1-1-1994 1-1-1992 
1.1.1995 
W 
X 
EXCISE DUTY RATES 
CDAD,-! iMG WINE (per hectolitre '/An f • L A ^K 
ECUS 
600 
500 ~ 
400 -
300 -
200 -
100 -
0 -* m^r-m E3 ^ 
B DK D EL ES RL NL 
1-1-1990 
1-1-1993 • 1-1-1991 
L_J 1-1-1994 1-1-1992 
1.1.1995 > 
2 
X Cl s s 

EXCISE DUTY RATES 
BEER (per hectolitre/degree Plato) 
Ecus 
12 
10 H 
8 
6 H 
4 
2 H 
0 i ETTIPI m NO ^ 
^ I 
B DK D EL IRL 
^ 1.1.1990 
Hi 1.1.1993 J 1.1.1991 
3 1.1.1994 •• 1.1.1992 
HI 1.1.1995 
X 
n 
EXCISE DUTY RATES 
SPIRITS (per hectolitre of pure alcoho^ 
1000 ECUS 
4 H 
B DK D EL ES RL L NL J i i 
m 
UK i 
m 1.1.1990 
1.1.1993 1.1.1991 
1.1.1994 •I 1.1.1992 
IS 1.1.1995 
X 
n 
c/i 00 



42 
ANNEX D(l) 
WINE 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
36,28 
86,10 
0,00 
0,00 
0,00 
3,31 
271,88 
0,00 
0,00 
48,51 
-
0,00 
-
-
165,89 
0,00 EXCISE 1.1.95 
(ECU 3.10.94) 
37,22 
86,95 
0,00 
0,00 
0,00 
3,35 
271,58 
0,00 
0,00 
49,94 
0,00 
0,00 
284,24 
284,30 
179,58 
0,00 % CHANGE IN 
ECU TERMS 
3% 
1% 
0% 
0% 
0% 
1% 
0% 
0% 
0% 
3% 
-
0% 
-
-
8% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
0% 
0% 
0% 
0% 
0% 
0% 
5% 
0% 
0% 
0% 
-
0% 
-
-
6% 
0% 
43 
ANNEX D(2) 
BEER 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 
(IN ECU PER HL/DEGREE PLATO OF FINISHED PRODUCT) 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
1,46 
3,29 
0,79 
0,95 
0,76 
0,75 
9,24 
1,57 
0,79 
1,65 
-
1,22 
• -
-
5,24 
0,75 EXCISE 1.1.95 
(ECU 3.10.94) 
1,49 
3,32 
0,80 
0,82 
0,75 
0,76 
8,75 
1,40 
0,81 
1,82 
1,48 
1,31 
11,37 
10,09 
5,53 
0,75 % CHANGE IN 
ECU TERMS 
3% 
1% 
1% 
-13% 
-2% 
1% 
-5% 
-10% 
3% 
10% 
-
7% 
-
-
6% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
0% 
0% 
0% 
0% 
13% 
0% 
0% 
0% 
0% 
7% 
-
20% 
-
-
4% 
0% 
SPIRITS 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 44 
ANNEX D(3) 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
1566,03 
3662,13 
1315,95 
549,12 
578,31 
1174,32 
2676,78 
662,90 
1011,14 
1433,96 
-
726,86 
-
-
2484,66 
550,00 EXCISE 1.1.95 
(ECU 3.10.94) 
1606,68 
3698,49 
1326,65 
550,00 
551,59 
1381,45 
2757,34 
593,32 
1037,39 
1540,05 
739,26 
715,15 
5016,08 
5131,68 
2634,06 
550,00 % CHANGE IN 
ECU TERMS 
3% 
1% 
1% 
0% 
-5% 
18% 
3% 
-10% 
3% 
7% 
-
-2% 
-
-
6% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
0% 
0% 
0% 
16% 
10% 
16% 
9% 
0% 
0% 
4% 
-
10% 
-
-
4% 
UNLEADED PETROL 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 45 
ANNEX D(4) 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
374,86 
293,26 
423,17 
409,92 
365,06 
426,12 
348,37 
478,13 
267,83 
438,36 
293,98 
474,29 
390,28 
523,98 
323,09 
287,00 EXCISE 1.1.95 
(ECU 3.10.94) 
409,89 
381,80 
509,85 
389,04 
361,60 
544,70 
345,82 
471,43 
354,48 
502,43 
333,40 
442,88 
456,97 
440,63 
400,48 
287,00 % CHANGE IN 
ECU TERMS 
9% 
30% 
20% 
-5% 
-1% 
28% 
-1% 
-1% 
32% 
15% 
13% 
-7% 
17% 
-16% 
24% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
7% 
29% 
20% 
10% 
14% 
26% 
5% 
10% 
29% 
11% 
11% 
4% 
12% 
5% 
22% 
0% 
LEADED PETROL 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 46 
ANNEX D(5) 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
447,61 
378,04 
474,77 
469,05 
401,21 
481,34 
382,49 
528,42 
331,95 
500,53 
355,38 
542,86 
462,16 
592,86 
383,55 
337,00 EXCISE 1.1.95 
(ECU 3.10.94) 
479,47 
467,29 
561,88 
406,10 
393,68 
584,77 
378,16 
527,32 
407,62 
566,45 
406,59 
478,64 
532,21 
498,01 
462,11 
337,00 % CHANGE IN 
ECU TERMS 
7% 
24% 
18% 
-13% 
-2% 
21% 
-1% 
0% 
/ 23% 
13% 
14% 
-12% 
15% 
-16% 
20% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
4% 
22% 
17% 
6% 
13% 
20% 
4% 
11% 
20% 
10% 
12% 
-1% 
10% 
5% 
18% 
0% 
DIESEL OIL USED AS PROPELLANT 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 47 
ANNEX D(6) 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
278,68 
266,58 
283,83 
268,03 
' 269,64 
251,61 
297,33 
361,70 
204,69 
250,51 
218,86 
297,14 
185,79 
.372,73 
315,32 
245,00 EXCISE 1.1.95 
(ECU 3.10.94) 
296,03 
299,49 
322,56 
245,71 
262,24 
326,00 
297,46 
349,82 
253,02 
295,09 
243,22 
315,18 
298,46 
313,10 
400,48 
245,00 % CHANGE IN 
ECU TERMS 
6% 
12% 
14% 
-8% 
-3% 
30% 
0% 
-3% 
24% 
18% 
11% 
6% 
61% 
-16% 
27% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
4% 
11% 
13% 
6% 
12% 
28% 
6% 
8% 
20% . 
14% 
9% 
19% 
53% 
5% 
25% 
0% 
48 
ANNEX D(7) 
GAS OIL - HEATING PURPOSES 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
5,00 
229,90 
41,28 
153,72 
79,52 
63,99 
49,71 
361,70 
5,18 
46,29 
46,89 
0,00 
19,40 
197,17 
16,93 
18,00 EXCISE 1.1.95 
(ECU 3.10.94) 
5,31 
299,49 
41,62 
133,09 
76,72 
73,80 
47,11 
349,82 
5,31 
47,66 
48,05 
0,00 
33,91 
168,78 
27,37 
18,00 % CHANGE IN 
ECU TERMS 
6% 
30% 
1% 
-13% 
-4% 
15% 
-5% 
-3% 
3% 
3% 
2% 
-
75% 
-14% 
62% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
4% 
29% 
0% 
0% 
11% 
14% 
0% 
8% 
0% 
0% 
0% 
0% 
67% 
7% 
59% 
0% 
HEAVY FUEL OIL 
DEVELOPMENT OF EXCISE RATES 
BETWEEN 1.1.1993 AND 1.1.1995 49 
ANNEX D(8) 
MEMBER 
STATE 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
UK 
EU-min EXCISE 1.1.93 
(ECU 1.10.92) 
18,50 
' 260,27 
15,48 
47,30 
13,01 
19,35 
10,13 
52,03 
18,50 
15,43 
14,45 
•51,43 
1S,26 
207,55 
13,17 
13,00 EXCISE 1.1.95 
(ECU 3.10.94) 
18,98 
262,85 
15,61 
40,95 
13,08 
21,73 
13,39 
46,57 
18,98 
15,91 
14,79 
28,10 
34,19 
177,66 
21,23 
13,00 % CHANGE IN 
ECU TERMS 
3% 
1% 
1% 
-13% 
1% 
12% 
32% 
-10% 
3% 
3% 
2% 
-45% 
87% 
-14% 
61% 
0% % CHANGE IN 
NATIONAL 
CURRENCY 
TERMS 
0% 
0% 
0% 
0% 
16% 
11% 
39% 
0% 
0% 
0% 
0% 
-39% 
79% 
7% 
58% 
0% 
DEVELOPMENT OF EXCHANGE RATE BETWEEN 
THE ECU AND NATIONAL CURRENCIES 50 
ANNEX E 
CURRENCY 
Belgium franc 
Danish krone 
German mark 
Greek drachma 
Spanish peseta 
French franc 
Irish pound 
Italian lira 
Luxemburg franc 
Dutch guilder 
Austrian shilling 
Portuguese escudo 
Finnish mark 
Swedish krona 
UK sterling VALUE OF 1 ECU 
01.10.92 
40,5484 
7,60759 
1,93777 
253,707 
138,333 
6,65065 
0,750341 
1729,67 
40,5484 
2,21624 
13,8444 
174,999 
6,25968 
7,40482 
0,797291 01.10.93 
41,3455 
7,71643 
1,90933 
274,904 
154,073 
6,65763 
0,815414 
1857,14 
41,3455 
2,14447 
13,4339 
196,425 
6,81121 
9,475 
0,779574 03.10.1994 
39,5224 
7,53281 
1,92213 
293,028 
159,014 
6,55831 
0,791706 
1932,52 
39,5224 
2,15253 
13,5271 
195,763 
5,98076 
9,23674 
0,782062 % CHANGE 
OVER A 2-
YEAR 
PERIOD 
2,5% 
1,0% 
0,8% 
-15,5% 
-15,0% 
. 1,4% 
-5,5% 
-11,7% 
2,5% 
2,9% 
2,3% 
-11,9% 
4,5% 
-24,7% 
1,9% 
51 
ANNEX F 
CONSUMER PRICE INDEX - % INCREASE 
1993-1994 
(NATIONAL CURRENCIES) 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxemburg 
Netherlands 
Portugal 
United Kingdom 
EUR 12 1993 
2.8 
1.3 
4.1 
14.5 
4.6 
2.1 
1.4 
4.5 
3.6 
2.1 
6.5 
1.6 
3.4 1994 
2.4 
2.0 
3.0 
10.9 
4.7 
1.8 
2.3 
4.0 
2.2 
2.8 
5.2 
2.5 
3.1 Cumulative 
5.3 
3.3 
7.2 
27.0 
9.5 
3.9 
3.7 
8.7 
5.9 
5.0 
12.0 
4.1 
6.6 
Source: Eurostat 
52 
ANNEX G 
CIGARETTE EXCISE RATES 
FOR 1,000 CIGARETTES OF THE MOST POPULAR PRICE CATEGORY 
Member 
State 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxemburg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden3^ 
UK Retail selling 
price (RSP) 
most popular 
category 
116,39 
192,49 
127,46 
81,90 
39,30 
125,79 
173,04 
80,21 
88,05 
104,99 
107,19 
66,41 
166,37 
165,10 
172,62 VAT 
As %of 
RSP 
17,01% 
20,00% 
13,04% 
15,25% 
13,79% 
15,68% 
17,36% 
15,97% 
10,71% 
14,89% 
16,67% 
14,53% 
18,03% 
20,00% 
14,98% EXCISE 
Specific excise 
in ecu 
9,03 
80,55 
43,18 
2,98 
2,52 
4,72 
72,26 
2,93 
3,04 
37,75 
17,15 
7,42 
12,54 
81,20 
73,70 As° % of 
total tax1) 
10,38% 
50,38% 
47,24% 
5,00% 
9,12% 
5,04% 
54,99% 
5,00% 
5,02% 
50,01% 
21,72% 
13,67% 
9,97% 
71,09% 
54,97% Ad valorem 
As % of 
RSP 
50,00% 
21,22% 
24,80% 
53,86% 
50,00% 
54,95% 
16,82% 
53,35% 
54,50% 
21,05% 
41,00% 
56,00% 
50,00% 
0,00% 
20,00% Total excise duty 
in ecu 
67,23 
121,40 
74,79 
47,09 
22,17 
73,84 
101,37 
45,72 
51,02 
59,85 
61,10 
44,60 
95,72 
81,20 
108,23 As % of 
RSP2) 
57,76% 
63,07% 
58,68% 
57,50% 
56,40% 
58,70% 
58,58% 
57,00% 
57,95% 
57,00% 
57,00% 
67,17% 
57,54% 
49,18% 
62,70% 
^ Must be between 5 and 55%. 
2) Must not be less than 57%. 
3) Sweden has a derogation and need not apply the ad valorem tax until 1996 and need not be above 
the 57%-level before 1999. 


53 
ISSN 0254-1475 
COM(95) 285 final 
DOCUMENTS 
EN 09 
Catalogue number : CB-CO-95-362-EN-C 
ISBN 92-77-91482-3 
Office for Officiai Publications of the European Communities 
L-2985 Luxembourg