5.

I believe, as I said earlier, that the Court's judgment will be consistent with those statements only if, as suggested by the plaintiff in the main proceedings, the Commission, and the French Government, it is held that the unlawful importation of narcotic drugs is similarly not subject to turnover tax. Let us analyse one by one the arguments put forward by the German Government. The first argument: the Second (or Sixth) Directive applies to all imports and does not distinguish between lawful and unlawful imports or in any way exempt the latter. That observation is correct, but — and this is the point — it could have applied, without amendment, to the Common Customs Tariff in which there are similarly no provisions exempting imports of narcotic drugs. The Court did not take account of that fact or, rather, it attached greater importance to the principle that the goods must be distributed through lawful economic channels. The objection will be raised that the Court took that view because of the particular purposes (development of international trade and removal of obstacles to trade) attributed to the Common Customs Tariff by the relevant Community provisions. Let us therefore examine the purposes of value-added tax in the light of the First Directive (227 of 11 April 1967) on the harmonization of legislation concerning turnover taxes. The first recital in the preamble thereto states that “the main objective of the Treaty is to establish, within the framework of an economic union, a common market within which there is healthy competition and whose characteristics are similar to those of a domestic market”. The second recital continues “the attainment of this objective presupposes the prior application in Member States of legislation ... such as will not distort conditions of free competition or hinder the free movement of goods ... within the common market”. Consequently, I do not see why the illegal distribution of narcotic drugs, that is to say something which must, as the Court stated, be dealt with by criminal-law provisions, should be less extraneous to those purposes than to those of the Common Customs Tariff. The second argument: the functions of and the events giving rise to the two charges do not coincide. That observation is likewise not in itself contestable; but to deduce from it that the decisions of the Court regarding the non-payability of duties arc not applicable to value-added tax stretch it too far. Thus, whilst it is true that customs duties and value-added tax have different objectives, it is also true that in the case of imports, where both are charges levied at the frontier, the difference is so scant as to be nonexistent. This is confirmed by the provision regarding the chargeable event. Pursuant to Article 7 (2) of the Second Directive (or, which comes to the same thing, Article 10 (3) of the Sixth Directive), the Member States may link the chargeable event and the date on which the payment of value-added tax falls due with the chargeable event and the date when payment of customs duties falls due. That is, admittedly, no more than a power, but, as far as I know, all the Member States have made use of it, if only in order to facilitate inspections. If that is correct, the principle which the Court has laid down regarding customs duties for which the chargeable event is uncertain applies also to value-added tax. In other words, drugs which have escaped control are, in this case too, treated as drugs which have been discovered and destroyed. The third argument: by contrast with the position regarding customs duties, the Community's powers with regard to value-added tax are restricted to harmonization, so that the Member States remain entitled to tax illegal imports of drugs. I do not agree. In the case both of customs duties and of value-added tax, the basis of the Community provisions is the Treaty and it is of scant importance whether the articles to which they give effect are Articles 18 to 29 or 99 to 100. Both groups of provisions are linked with those laying down basic principles — Articles 2 and 3 — which determine the powers and means of action available to the Community. Moreover, the European rules on value-added tax are exhaustive in character; it is therefore improbable that the Community legislature would have left the Member States scope to intervene to an extent capable of frustrating its harmonizing measures. The fourth argument: the application of value-added tax to illegal imports of drugs is a more effective means of social control than of criminal law provisions; in any case, the State has an interest in not encouraging the “underground economy”, and that economy would be encouraged if huge transfers of wealth linked with the market in drugs escaped turnover tax. This argument has undeniable attractions: but from the ethical and political point of view — and that is the only basis on which it can be assessed — it is rejected by many experts in tax law and finance. Personally, I follow the school of thought which distinguishes between transactions which are prohibited by civil law (prostitution, for example) and those which are prohibited by criminal law. I favour the authorities which tax the former and consider the latter to be irrelevant from the point of view of tax.