WRITTEN QUESTION E-1125/01

by Ilda Figueiredo (GUE/NGL) to the Commission

(6 April 2001)

Subject: Special levy on alcoholic beverages and rate of VAT on wine

On 19 March 2001 the Portuguese press reported that the Commission was preparing to withdraw the exemption for wine from the special levy on alcoholic beverages and end the possibility of applying a reduced rate of VAT, with a consequent increase from 5 % to 17 %. It was also stressed that the Commission is set to bring about these changes without consulting Portugal or Greece, having received the tacit agreement of France and Italy.

Everyone is aware of the socio-economic and cultural importance of the wine sector, particularly for southern countries. It is also well known that wine is essentially an agricultural product and that it is largely produced outside the industrial structures found in the case of other alcoholic beverages such as beer. Changing the exemption from the special levy would lead to wine prices increasing by Esc 30 per litre. The combined impact of this measure and changes in the VAT rate would be a dramatic rise in consumer prices and a reduction in the consumption of wine in favour of other products, which would have a detrimental effect on the sector. This is of course the aim of the strong lobby representing multinational beer companies, chiefly concentrated in northern Europe.

In this context, can the Commission confirm the reports published in the Portuguese press?

If so, does it not consider that this proposal runs counter to the protection of multifunctional, sustainable agriculture which respects the environment and produces quality, safe products for consumers, such as wine-growing and wine-producing, and that the exemption from the special levy should therefore be maintained?

Have any studies been made to assess the impact of these measures on producer countries, particularly Portugal?

Will the Commission consult Portugal on the proposed measures?

Answer given by Mr Bolkestein on behalf of the Commission

(29 May 2001)

The Commission would like to inform the Honourable Member that the end of the application of a reduced VAT rate to wine in Portugal is the result of a recent judgement of the Court of Justice, of 8 March 2001 (Case C-276/98), in which such practise was considered as infringing the Sixth Vat Directive, Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes Common system of value added tax: uniform basis of assessment(1).

At present, the Commission is preparing its second report on the levels of the minimum excise duty rates and the excise duty rates applied by Member States on alcoholic beverages. In this context, all Member States have been consulted on the basis of a detailed questionnaire covering the various elements that the Commission has to address in its report. These elements are the proper functioning of the Internal Market, competition between different types of alcoholic beverages, the real value of the rates and other objectives of the EC Treaty, such as health and agricultural policy. Regarding the last point, the Commission is well aware of the concerns expressed by a number of wine-producing Member States about the impact of the introduction of a positive rate on wine, particularly upon the production of table wines.

Based on all the information and opinions received, the Commission is drafting its report, which should be adopted during the coming months. The issue raised by the Honourable Member will be addressed in the report. As yet, no decision has been taken on whether or not this report should be accompanied by a proposal for a Directive changing the minimum rates of excise duty on alcoholic beverages.

(1) OJ L 145, 13.6.1977.