EC calls for alcohol duty rise

The EC wants an increase in alcohol duty rates across Europe to tackle fraud and smuggling.

The proposal is likely to face fierce opposition, not just from the UK government, which is against any move to harmonise duty, but also from countries such as France and Italy who are keen to protect their wine trade.

EC officials have long believed that the differences in alcohol duty between member states hurts internal competition and leads to cross-border fraud.

The issue has also led to the cross-Channel trade which has seen pub sales hit by the flood of cheap beer brought into the country by day trippers and the "white van" brigade.

Until now, EC officials have focused on trying to persuade high-duty countries such as the UK and Sweden to lower their rates. However, a new report produced by the Brussels bureaucrats suggests EU governments and MEPs should consider raising the duty levels on alcoholic drinks instead.

Such a move would stop wine-producing countries subsidising producers through artificially low duty rates. It would also create a level playing field in new member states such as Poland and the Czech Republic, where distillers and brewers receive government support.

The report says duty rates are "meaningless" unless they rise in line with inflation. However, there is no timetable for presenting the proposals to EU finance ministers. The commission has acknowledged that the strength of the wine lobby would make it hard to win support for the proposal.

A Treasury spokesman confirmed to The Publican that the UK government would continue to oppose any moves towards tax and duty harmonisation.