WRITTEN QUESTION E-2135/99

by Bart Staes (Verts/ALE) to the Commission

(24 November 1999)

Subject: Abolition of tax-free shopping and the impact on jobs

On 1 July 1999 sales of duty-free goods in tax-free shops finally came to an end. These shops sold certain products (e.g. perfume, cigarettes and alcohol) tax-free to passengers on international flights. The ban followed a decision by the European Summit in Cologne on 3 and 4 June 1999 to apply Article 12 of the Sixth Council directive on VAT No 77/388/EEC(1) of 17 May 1977 in full. The article in question permitted intra-Community sales free of tax until 30 June 1999.

For a variety of reasons there was considerable opposition to the abolition of tax-free shopping in the European Union, e.g. because of the negative effect on jobs. The Commission and the Council have always argued that the ban on tax-free shopping would not lead to a loss of jobs. However, the evidence emerging from the industry is different. For example, sales at Sky Shops in Zaventem have fallen by a quarter since 30 June 1999. Management have been obliged to make 60 full-time employees redundant.

1. How many persons were employed full-time in tax-free shops in the European Union on 1 January 1999?

2. How many persons were employed full-time in tax-free shops in the European Union on 1 June 1999?

3. How many persons were employed full-time in tax-free shops in the European Union on 1 July 1999?

4. How many persons were employed full-time in tax-free shops in the European Union on 1 October 1999?

5. On the basis of the answers to questions 1-4, does the Commission acknowledge that the number of full-time jobs in tax-free shops in the European Union has fallen?

6. Does the Commission feel that these job losses are due to the abolition of tax-free shopping in the European Union? If so, is the Commission prepared to review the ban on tax-free shopping? If not, to what does the Commission attribute the loss of jobs in the tax-free shops sector?

(1) OJ L 145, 13.6.1977, p. 1.

Answer given by Mr Bolkestein on behalf of the Commission

(6 January 2000)

The Commission always recognised that the abolition of duty-free sales for intra-Community travellers might have an impact on employment. This was the reason it could agree with the Council in 1991 to grant a transitional period for the phasing out of duty-free arrangements.

More recently, in its communication to the Council concerning the employment aspects of the decision to abolish tax- and duty-free sales for intra-Community travellers(1), the Commission once again acknowledged that the abolition of duty-free sales is likely to affect employment. The impact was estimated by the Commission to be time limited and specific in terms both of localities and sectors affected, with maritime activities being potentially the most affected. This result was corroborated by estimates supplied by Member States on the foreseeable employment effects of implementing the Council's decision to abolish intra-Community duty-free sales. The Commission's analysis however also showed that, in the medium term, revenue recycling and sales re-location could well lead to a net creation of jobs.

The Commission does not have the requested information regarding the number of people employed in duty-free shops. The reason for this is that statistical data is only available on employment in the whole retail sector as such(2). In its analysis of the employment aspects of the Council's decision, the Commission therefore based itself on industry estimates of jobs affected by the abolition of duty-free sales(3). These aggregate estimates however did not disclose the underlying employment figures for duty-free shops.

As regards the employment impact of the abolition, the Commission would refer the Honourable Member to the reply given to written question E-1999/99 by Mr Davies(4).

(1) COM(1999) 65.

(2) Retailing in the European Economic Area 1997, Luxembourg 1998 by the European Commission (Statistical Office of the European Communities, DG XXI).

(3) See point 5 of the communication.

(4) OJ C 203 E, 18.7.2000, p. 109.