CELEX: 51974PC0339
Language: en
Date: 1974-03-22
Title: PROPOSAL FOR A THIRD COUNCIL DIRECTIVE on taxes other turnover taxes affecting the consumption of manufactured tobacco

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (74) 339
Vol. 1974/0060
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 ---pagebreak--- COMMISSION OF THE EURQFEÂN GO!MMUMTIE
                                                    COM ( 74 ) 339 Final
                                                    Brussels , 22 March 1974
                     PROPOSAL FOR A THIRD COUNCIL DIRECTIVE
               on taxes other turnover taxes affecting the
                       consumption of manufactured, tobacco
                  ( submitted to the Council by the Commission )
   COM(74 ) 339 Final
 ---pagebreak---                            Explanatory' Menorr.ndu.ii
Bac'rsround
The Member States were obliged, to apply , by 1 July 1973 at the latest ,
the Council Directive of 19 December 1972^" concerning taxes other than
turnover taxes which affect the consumption of manufactured tobacco ?. In
addition to certain veiy general principles applicable to the structures
of the excise duty to which the Member States are to subject manufactured
tobacco , the Directive laid down special provisions applicable over a
first stage of harmonization , extending from 1 July 1973 to 30 June 197 5 •
Relating only to cigarettes , those special provisions laid down the limits
within which the ratio between the proportional component and the specific
component of the mixed excise system prescribed therein may vary . It is
provided , in particular , that the specific component of the excise duty
may not be less than 5$ n°r more than 75% of the aggregate amount of the
proportional excise duty and the specific duty . The Directive does not
determine the structure of excise duties on products other than cigarettes .
Apart from the United Kingdom and Ireland , who are authorized to postpone
implementation of the Directive until 31 December 1977 » "the Member States
have incorporated the provisions of tho Directive into their national law .
The situation for cigarettes can be tabulated as follows :
    Prance ...      )       5% of the total duty consists of a specific
    TXnl ..         )
    Italy           j               amount per cigarette
    Belgium         )
    Netherlands
                           95^ of the total duty consists of an ad valorem
    Luxembourg                 rate applied to the retail selling price
 OJ No , L 303 , 31 December 1972 , pp . 1-3 »
                                                                   • • •/• • •
 ---pagebreak---                                     - 2 -
    Geraarf    ) 75?' °f "the total duty consists of a specific amount per
               <      cigarette
    Denmark j 25$ of the total.J-uty . consists of an ad valorem rate
              )       applied to the retail selling price .
    United    )
                 the excise duty is 10C$ specific ( under a derogation
    Kingdom j    granted until 31 December 1977 )*
    Ireland )
Reasons
With a view to continuing the harmonization after 30 June 1975 » the
Directive provides ( Article l(4 ) read with Article 7(l )) that , on the
basis of Articles 99 a^d 100 of the Treaty , the Council must , before
1 July 1974j adopt a Directive laying down the special criteria
applicable during the following stage or stages . These criteria were to
enter into force on 1 July 1975 *
As regards excise duties on cigarettes , what is mainly to be done is to ,
fix a narrower range than provided for in Article 8(2 ) of the Directive
of 19 December 1972 for the ratio between the specific component and the
proportional component of the excise duty .     Indeed by the final stage of
harmonization of the structures , this ratio is to be the same in all tho
Member States .                                         t
Another solution might consist in abolishing the intermediary stages'
between the structure laid down by the Directive of 19 December 1972 and
the date when the final structure is applied , provided the Member States
agree in advance on the final structure .
The structure of the excise duty on other manufactured products still
remains to be determined .
                                                                  • • •/• • *
 ---pagebreak---                                     - 3 -
In tho course of preparatory work carried out by the Commission , it was
found that , for technical reasons and before proposals on the
harmonization of excise structures are prepared , the Council should first
be presented with a proposal for a Directive defining the different groups
of manufactured tobacco . This proposal , entitled " Second Council
Directive on taxes other than turnover taxes which affect the consumption
of manufactured tobacco" is also based on the Council Directive of
19 December 1972 .
In the co\irse of this preparatory work it was also found that there were
still major differences of opinion as to the structure of the exc.'.se duty
on cigarettes , in particular as regards the establishment of a r..avrower
range of ratios between the specific component and the ad valor •■■•n
component of the excise duty , since the ultimate aim is to establish a
single ratio which , however , is not yet defined .
As a result of the method of calculating the ad valorem component of the
excise duty , the value added tax and the trading profit margin , depending
on the retail selling price and as a result also of the way in which each
of these elements of the cost price tends to increase the others , any
difference , however slight , between these components can give rise to a
not inconsiderable difference between the retail selling prices . The
fact that enlargement of the Community has further increased the
differences between market conditions has also made it more difficult to
fix satisfactory criteria for further harmonization of taxes on
manufactured tobacco . Further consideration is necessary before proposals
can be put forward. For these reasons the Commission feels that it is
desirable and necessary to extend the first stage of harmonisation by one
year to 30 June 1976 •
 ---pagebreak---                      Proposal for a Third Council Directive
                on taxes other than turnover taxes affecting the
                      consumption of manufactured, tobacco
 THE COUNCIL OF THE EUROPEAN COMIUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
and in particular Articles 99 and 100 thereof ;
Having regard to the proposal from the Commission ;
Having' regard to the Opinion of the European Parliament ;
Having regard to the Opinion of the Economic and Social Committee ;
Whereas the Council Directive of 19 December 1972^" on taxes other than
turnover taxes which affect the consumption of manufactured tobacco , under
which the Council is to adopt , before 30 June 1974 » a- Directive laying
down the special criteria applicable after the first stage which , subject
to Article 1(4 ) » is to cover a period of 12 months from 1 July 19735
Whereas , under Article 1(4 ) of "the Directive aforesaid , the transition from
one stage of harmonizattion to the next may be deferred ;
Whereas , if special criteria applicable to the following stage or stages
are to be fixed , it is necessary , for technical reasons , for the Council
to adopt , in accordance with Article 3(2 ) of the Directive , on a proposal
from the Commission , the necessary provisions for determining the way in
which manufactured tobacco should be defined and classified in groups ;
Whereas these provisions have now been incorporated in a proposal from the
Commission ;
  OJ No . L 303 , 31 December 1972 , pp . 1-3
 ---pagebreak--- Whereas the special criteria applicable during the following stage or
stages must "be preceded "by further - consideration of. the conditions in
the market in manufactured tobaccos in the enlarged Community ;
Whereas the first stage therefore needs to be extended by 12 months :
HAS ADOPTED THIS DIRECTIVE i
 ---pagebreak---                                      - 3 -
                                    Article 1
Article 7 ( 1 ) of "the Council Directive of 19 December 1972 is amended to
read as follows :
" 1 . Subject to Article 1(4 ) » "the first stase of harmonization of the
      structures of the excise duty on manufactured tobacco shall cover
      a period of 36 months from 1 July 197 3" •
                                    Article 2
This Directive is addressed to the Member States .
Done at Brussels ,
                                                       For the Council
                                                        The President