Heather Jones, Alcohol & Tobacco Sector Unit C2, DG TAXUD

Transcription

1 6 th European Alcohol Policy Conference Fiscal Policies in the EU - what's happening in alcohol taxation? Excise duties on alcohol: the EU perspective and policy developments Heather Jones, Alcohol & Tobacco Sector Unit C2, DG TAXUD

2 Alcohol the 2 Directives Provisions determined by Directive 92/83/EEC (structures) and Directive 92/84/EEC (minimum rates) MS can fix their own national rates for alcohol and alcoholic beverages provided that: they respect the minima laid down in Directive 92/84/EEC they respect the provisions of Article 110 of the TFEU* 2

3 Purpose of Directive 92/83/EEC the alcohol structures directive Harmonised structural basis to the alcohol duties: Defines the alcohol products that are subject to excise duty. Details the methods by which duty must be charged (i.e. how the duty is calculated). Provides exemptions from duty (private production / own consumption, denatured alcohol). Gives Member States the discretion to provide reduced rates in certain circumstances / certain products (small producers, low alcohol by volume). 3

4 Purpose of Directive 92/84/EEC the alcohol rates directive This directive is aimed at approximation of minimum rates Revenue from excise taxation goes to national governments and Member States have different policies on appropriate levels for alcohol taxation. Specifies minimum rates with which Member States must comply. Member States have freedom to set the rates at levels they deem appropriate on condition that the minimum rates are complied with. 4

5 Changes to the Directives...Require unanimity 2006 proposal to look at the "rates" Directive" (92/93) proved unsuccessful However, there was some support for other changes: Classification e.g. "intermediate products" Reduced rates / own consumption Exemptions 5

6 Deliverables to date. Commission Regulation 162/2013 (replacing 3199/93) with the list of completely denatured alcohol (CDA) denaturing methods in the annex "Euro" CDA formulation now adopted by all 29 MS Over 60% of the remaining weaker national formulations have been removed Work on-going to remove the others Work has started on partially denatured alcohol (PDA) with a series of recommendations and opinions (& for certain products in the cosmetics, perfumes sector) 6

7 PDA - Recommendations 2 & 3/2014 Recommendation 2 Banning the use of methanol as a denaturant in the cosmetics, perfumes and personal hygiene sector Recommendation 3 The use of one of two chemical analytical markers in certain high risk products (liquids) in the cosmetics, perfumes and personal hygiene sector Both recommendations have been adopted by the ITEG 7

8 A different way of working? Soft law Recommendations and opinions which can be voted under simple majority (Indirect Tax Expert Group) Quicker, more efficient vehicle for change Proposals are made based on evidence and analysis from Fiscalis Project groups 8

9 Current TAXUD priorities - Denatured alcohol what's the problem? O,72 9

10 Can you (safely) drink fake products? Some examples Kenya 55 deaths 2013 Libya 101 deaths 2013 India 192 deaths 2013 Cuba 7 deaths 2012 CZ Rep 42 deaths 2011 Ecuador 23 deaths 2009 Thailand 25 deaths 10

11 Source: Narodowy Fundusz Zdrowia (Nationa Health Fund), 2013 Statistics from Poland Year Hospital data based: methanol and glycol intoxications and fatal cases Methanol Glycol Intoxications Deaths Intoxications Deaths no data 115 no data no data 150 no data no data 156 no data no data 158 no data no data 156 no data

12 An EU problem? "Surrogate" alcohol is said (WHO) to represent 30% of global unrecorded alcohol Denatured alcohol is included in the COM Anti-Fraud Action plan Lack of credible data illicit product is often seized and destroyed and not analysed Evidence of increasing illegal activity the "standard" surrogate alcohol e.g. anti-freeze, screen wash, mouthwash now also joined by perfume, aftershave, nail varnish remover etc Smelling and tasting agents are easy / cheap to remove 12

13 Only an Eastern EU problem? No E.g. UK case (2009 but fake product still on market in 2014) Denatured alcohol cleaned up to produce 25,000L "vodka" 165,000 bottles sold at retail 1,5m revenue loss Risk of explosion Damage to the legitimate brand Simple bleach to remove the dye Found to be nail varnish remover (because of the marker) 13

14 How can you tell what you are drinking? You can't The remaining "off-flavours" are masked with aromas The first symptoms are similar to the feeling caused by drinking alcohol (ethanol) intoxication, slurred speech etc Within a few hours, more toxic effects become apparent. Symptoms may include nausea, vomiting, convulsions, stupor, or even coma / death The fraud is so sophisticated now that it's difficult to tell the difference when offered known "brands" at retail An additional problem is that you can't tell from the label what denaturing chemical(s) are used. 14

15 The problem.fiscal (and health) risks The tax exemption given to denatured alcohol makes the fraud very attractive / lucrative + it is also cheap to "clean up" the alcohol, using fairly basic techniques like bleaching agents / charcoal distillation / dilution. Some criminal gangs are "stretching" the alcohol with methanol The COM also want to protect legitimate trade avoid situations where the reputation of legitimate products may be compromised and/or products temporarily banned from commercialisation because of criminals exploiting weaknesses in the denaturing procedures The COM want to make the life of criminals difficult and life of the legitimate industry easier! 15

16 Recent comms. 16

17 So - what's happening in Continuing the project on denatured alcohol in priority order: Screen wash, de-icer, anti-freeze Bio-fuels Paint, ink, solvents Alcohol study on the "structures" Directive (92/83) Including a focus on 4 key areas: Exemptions high risk product groups (as above) Classification of alcohol products ("intermediate products", "other fermented beverages") Reduced rates / private production, own consumption Beer duty calculations 17