4.

Even if, in view of the foregoing observations, there are in fact strong grounds for concluding that the Italian system of taxation — in so far as it is concerned, on the one hand, with the taxation of spirits distilled from cereals which are almost entirely imported and, on the other, with the taxation of spirits distilled from wine, a typical Italian product — is not in accordance with Article 95 it is however still necessary, before a final judgment is possible, to examine certain additional considerations which have been put forward by the Italian Government. The Italian Government referred to the fact that according to the case-law of the Court a differentiation in taxes and the application of reduced rates for certain types of products or classes of producers is permitted — as was emphasized in the judgment in Case 148/77 ( 16 ), for legitimate economic or social purposes, such as encouraging the use of certain raw materials, favouring the production of particular spirits of high quality or the maintenance in business of certain undertakings. In this connection, according to more recent decisions (see the judgment in Case 140/79 ( 17 )) the primary requirement is that objective criteria, such as the raw materials used or the production processes employed, should be applied and it is furthermore necessary to have regard only to the point whether the pursuit of certain objectives of economic policy is compatible with Community law. From the point of view of that case-law, according to the Italian Government, the relevant parts of the Italian tax system applicable to spirits are not in fact objectionable. In this connection, when low taxes are imposed on spirits distilled from wine it is clear that a prominent factor in this is the idea of providing support for viticulture, an area in which there is constant overproduction. By means of the tax system — and in view of the fact thai the costs are higher than in the production of spirits from cereal — an incentive is in fact created for the use of certain agricultural products, and this must thus be considered as compatible with the Treaty because the effects of such a policy are in accordance with the obiectivcs of Article 39 (ensuring a fair standard of living for the agricultural community; stabilization of markets). Furthermore it cannot be said, according to the haiian Government, that the system involves discrimination which, according to the case-law which has been cited, must alwavs be avoided. The reason which it gives for this view is that, although the svstem hampers the importation of spirits distilled from cereals, an equivalent effect is also to be noted on the corresponding domestic production which is perfectly possible owing to the existence of the necessary raw materials but is rendered virtually impossible by that very system of taxation. I have, however, very serious objections to that view. In the judgment in Case 148/77 ( 16 ), in which the lawfulness of tax advantages for specific products is mentioned, it is also stressed that those advantages must be extended to imponed products when they are to be considered similar or fulfil the criteria laid down in the second paragraph of Article 95 which, as has been shown, is the case for whisky and spirits distilled from wine. Furthermore the argument that tax advantages for spirits distilled from wine are justified on grounds of economic and social polio.- has already been advanced in the proceedings concerned the banderole tax in Case 169/78 ( 18 ). In its judgment the Court of Justice did not consider it and thus by implication disregarded it as irrelevant. Thai cannot simply be explained, as the Italian Government is now seeking to do, on the basis that the banderole tax is in any case of such little importance that it cannot contribute to the effective pursuit of objectives of economic policy. It is of prime importance not to overlook the nature of the facts in Cases 140/79 ( 19 ) and 46/80 ( 20 ), the judgments in which the Italian Government has primarily relied upon in support of its view. These cases concerned the taxation of spirits from petroleum derivatives on the one hand and of spirits from agricultural products on the other. It was found in this connection that the particular objective which was pursued through the different rates of tax was to hamper the production of spirits from petroleum derivatives in order that that material, which had to be imported, should be applied primarily to another end and at the same time it was intended to favour agricultural raw materials for the purpose of Community preference. It could therefore be said that a legitimate objective of industrial policy was being pursued and that this did not conflict with the rules of Community law or the requirements of a policy decided within the tramework of the Community. There are very considerable differences between the facts in this case and the situation just described. This case is in fact concerned exclusively with the taxation of spirits obtained from agricultural products. Vhat is concerned is thus not the pursuit of objectives of industrial policy but the placing of emphasis within the framework of the agricultural policy. With good reason the case-law of the Court provides no support for the argument that in this field national measures of tax policy might be permissible. Even though no common organization of the market in spirits is yet in existence it must not in fact be forgotten that the basic materials for the production of the spirits of the kind in question constitute products coming within common organizations of the market and that in both cases there are problems of overproduction, albeit perhaps on differing scales. It must also not be forgotten that at Community level special measures are regularly taken to reduce surpluses of one of these very products, namely wine. Measures for the distillation of spirits from wine are repeatedly promoted with the help of subsidies from the European Agricultural Guidance and Guarantee Fund. I therefore find it inconceivable that in this field, where the Treaty in principle makes provision for a common policy, supplementary national tax measures which could bring about a deflection from the course intended by the Community might be declared lawful. It is not possible to deduce from aforesaid judgments which in fact, contran to the views of the Italian Government, may not be interpreted widely, any arguments for the purposes of the problem with which we are at present concerned, namely the taxation of spirits distilled from cereals and spirits distilled from wine. For that reason it is also unnecessary to consider the point whether those judgments provide a basis for the argument to the effect that, for the purpose of judging whether discrimination exists, it is sufficient that there should be a potential for national production. The matter may in fact rest with the findings made initially in connection with the first and second paragraphs of Article 95.