12.9.88 Official]ournalofthe European Communities l^oC2^7B27 
^.2. In any e^ent, the difficulties outlined inChap 
ter^must be resolved before the clearing mechanism 
(if it is finally adopted) can work properly. 
LooneatBrussels,7]ulyl988 
1, Introduction 
LI. On211^o^ember 1985, the Commission presents 
ed the Council withaproposalforaPoirecti^e imposing 
astandstillon^alueaddedta^(VAL) and excise duties. 
1.2. PheEuropean parliament generally supported 
the proposal, but asked foranumber of amendments to 
be made. One ofthese was accepted by the Commission, 
which altered its original proposal. 
1B^. LheEconomicandSocial Committee issued a 
favourable Opinion (^), rapporteur Mr Poella Croce, 
but noted that^ 
a) the adoption of the Poirecti^e should not ser^e as an 
excuse for curbing or slowing down the harmonica 
tion which was ^ital for the building of the iniernal 
market, 
^oie^e^om^i^^ ^oi^De^7,^^i^^ ^, Eor the long term at least, we must aim for 
single rates of indirect ta^ationthroughout the Com 
mumty,to simplify matters and facilitate competition. 
b) the term^standstilPwas inappropriate for the pro 
posal of an optional procedure for bringing rates 
closer together, 
c) it was regrettable that the proposal did not include 
provision for the drawang^up of lists of goods and 
services subject to the various VAf rates in the 
Member States'systems, 
d) the proposal did no^t consider the problem of goods 
and services which were perorated in some Member 
States, 
e) an effective, formal obligation should be placed on 
the Member States to mo^e towards convergence, 
f) the number ofVALrates should be reduced, 
g) theappro^imationof standard VAL ratesshould 
be based on the average standard rate in the Com 
mumty, and should be weighted to take account of 
trade levels, Opinion on the proposal foraCouncdfOirectiveinstitutingaprocess of convergence of rates 
ofvalue added ta^ and excise duties^) 
(88^C 2-37^9) 
On 11 Septemberl987 the Council decided to consult the Economic and Social Committee, 
under Article 198 of thelreaty estabhshingtheEuropean Economic Community, on the 
abovementioned matter. 
TheSectionforEconomic,EmancialandMonetary Questions, which wasresponsiblefor 
preparing the Committee'sworkon the subject, adopted its Opinion on!7May!988.Lhe 
rapporteur was Mr PoellaCroce. 
At its 257th plenary session(meetmgof7]uly 1988),the Economic and Social Committee 
adopted the following Opinion by a substantial majority, with ^ dissenting votes and 
^abstentions. 
No C 237/28 Official Journal of the European Communities 12. 9. 88 
h) it seemed ill-advised to exclude manufactured 
tobacco, alcoholic beverages and mineral oils from 
the provisions on excise duties, unless the Com­
mission presented a specific proposal on these. 
1.4. The Council has not yet taken a decision on the 
above Commission proposal. 
1.5. With doc. COM(87) 324 final/2, the Com­
mission has now presented a new proposal to introduce 
optional convergence of the number and level of VAT 
rates, prohibit the introduction of new excise duties or 
the raising of existing ones, and set out levels towards 
which any changes in excise duties on alcoholic bever­
ages, tobacco and mineral oils should move. 
2. General comments 
2.1. The present Opinion is of necessity linked to 
the Commission's other recent proposals on the har­
monization of indirect taxation rates, particularly [doc. 
COM(87) 321 and 322 final]. Here too we must stress 
the importance and complexity of the subject; a 
thorough analysis is needed both of the present situation 
and of the possible implications for Member States' tax 
revenue, company competitiveness, consumer purchas­
ing power and hence overall demand. 
2.2. Acceptance of the general thrust of the overall 
Commission proposal would mean a substantial change 
in the conditions which engendered the 1985 proposal, 
and would also make the present proposal appear inap­
propriate. 
2.3. By 1992, all Member States should have two 
VAT rates, varying within precise limits, and should 
set single excise duty rates. It therefore seems ill-judged 
simply to formalize the obligation not to widen existing 
divergences and to 'allow' movement towards the rates 
scheduled for 1992. 
2.4. Given the difficulties which Member States have 
had in the past when amending their tax systems, there 
is a danger of arriving at 1992 with the present situation 
virtually unaltered. This would pose a serious threat to 
harmonization, as it would mean carrying out a com­
plex and onerous operation in one fell swoop. 2.5. It would seem more sensible to propose a Direc­
tive which formally obliges all Member States to move 
gradually towards the final goal. 
2.6. The present divergences from the harmonized 
rates (in minimum and maximum figures) should thus 
be calculated. They should then be phased out in annual 
stages to be calculated in percentage terms. 
2.7. Achievement of the final goal could even be 
scheduled for a date after 1992, as this would seem 
unlikely seriously to hinder the removal of tax frontiers 
and the completion of the single market. 
2.8. Not only would gradual harmonization make 
the operation less risky and onerous; it would also 
mean that the advantages and disadvantages could start 
being assessed at once. 
2.9. The difficulties which taxation directives and 
draft directives have invariably come up against in the 
past are a further cause for concern. These difficulties 
stemmed from the specific needs of the individual Mem­
ber States, who have in any case traditionally been 
reluctant to accept Community rules in this field. 
2.10. It is hoped that the reports which the Com­
mission is to present in 1988 and 1990 will give a more 
encouraging picture of the situation. 
3. Specific comments 
3.1. Article 1 (3) should be amended to read as 
follows: 
'3. Obligatory convergence of the tax rates 
Member States must: 
a) alter the levels of their reduced and normal rates, 
moving them towards the limits laid down for 
harmonization on 1 January 1993, by an annual 
percentage equal to 25% of the differences 
between the current levels of the fates and those 
which are to apply on 1 January 1993. The first 
reduction must be made by 31 December 1989; 
b) abolish their increased tax rates or reduce them 
gradually by an annual proportional percentage 
so that they are completely abolished by 
31 December 1992.' 
3.2. Article 2 (4) should be amended to read as 
follows: 
'4. Member States must alter the levels of the 
excise duties levied on the products mentioned in 
point 3, moving them towards the limits laid down 
for harmonization on 1 January 1993, by an annual 
12. 9. 88 Official Journal of the European Communities No C 237/29 
percentage equal to 25 % of the difference between 
the current levels of the rates and those which are 
to apply on 1 January 1993. The first reduction 
should be made by 31 December 1989.' 
3.3. In line with point 2.7 above, if convergence were 
obligatory, complete harmonization of indirect taxes 
could even be postponed until after the scheduled date 
of 1 January 1993 (e.g. until 1995). In this case, the 
Done at Brussels, 7 July 1988. 
1. Introduction 
1.1. In the context of the removal of border controls 
in 1992 the approximation of taxation on tobacco prod­
ucts is particularly important because of their special 
characteristics: they are goods of high value, low bulk, 
and widespread consumption, and can be transported 
accross borders with ease. 
1.2. The Commission has brought forward two dif­
ferent proposals: one for cigarettes which comprise over 
90% of the market and the second for manufactured 
tobacco other than cigarettes. These proposals replace 
previous proposals for the progressive harmonization 
of tobacco excise duties. 
(') OJ No C 251, 19. 9. 1987, p. 3 and 4. figure of 25% proposed in points 3.1 and 3.2 above 
should be altered accordingly. 
The Commission could suggest to the individual Mem­
ber States appropriate compensatory measures when 
the loss of excise revenue in any Member State is so 
significant that it creates serious revenue needs, as a 
direct result of tax harmonization, as well as social 
and economic difficulties which could lead to wider 
disparities between the regions of the Community. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT 
1.3. The Commission's proposal for cigarettes keeps 
to the structure of a mixed excise (part specific and 
part ad valorem as laid down in Directive 72/464/EEC. 
It also lays down a common specific duty and a band 
of ad valorem rates covering the proportional excise 
duty and VAT. 
1.4. In the case of manufactured tobacco other than 
cigarettes, where there is no existing Community law 
beyond a common system of product classification, the 
Commission proposes a common ad valorem structure 
and sets rate bands for the various products covering 
both the excise duty and the VAT. 
1.5. The Commission has not yet produced firm 
proposals on the mechanics of these taxes—how they 
are to be assessed and collected—in the new context of Opinion on the completion of the internal market: proposal for a Council Directive on the 
approximation of taxes on cigarettes, and proposal for a Council Directive on the approxi­
mation of taxes on manufactured tobacco other than cigarettes (l) 
(88/C 237/10) 
On 11 September 1987, the Council decided to consult the Economic and Social Committee, 
under Article 198 of the Treaty establishing the European Economic Community, in the 
abovementioned proposals. 
The Section for Economic, Financial and Monetary Questions, which was responsible for 
preparing the Committee's work on the subject, adopted its Opinion on 22 June 1988. The 
rapporteur was Mrs Robinson. 
At its 257th plenary session (meeting of 7 July 1988), the Economic and Social Committee 
adopted the following Opinion by a large majority in favour, with 2 votes against and no 
abstentions.