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Lords committee calls for reform of EU tax laws

Published:  06 March, 2015

A House of Lords committee has called on the EU to reform the structure of alcohol tax so that variable taxes on wine and cider according to alcoholic strength can be introduced.

It was part of the report on the new EU Alcohol strategy published today by the Lords EU Home Affairs, Health and Education sub-committee.

The report said EU rules that govern the structure of alcohol taxation needed to be reformed, saying it was "illogical" that Member States were prevented from raising duties on the most harmful substances and effectively provided incentives to purchase drinks with higher alcohol contents. A "more rational" tax structure would give an incentive to the manufacture of lower strength beers and wines, it claimed.

It said the measure was supported by the WSTA and the Scottish Whisky Association who said it was the "the only fair and responsible way to tax alcohol" and likely to be more effective than the minimum unit pricing (MUP).

However, the committee argued that minimum unit pricing should be introduced in England and Wales if it proves successful in Scotland. The Scottish government's plan to introduce a minimum price for alcohol was referred to the European Court of Justice in May after the SWA appealed the government's decision, arguing that it was in breach of European law.

"If the Court of Justice rules that the attempt by Scotland to impose minimum unit pricing is lawful, the government must monitor the effects of its introduction in Scotland. If it appears to be successful in targeting the heaviest drinkers, the government should implement its undertaking to introduce MUP in England and Wales," it said.

The committee also advised the government to review the formula currently used to calculate the minimum price of alcoholic drink, which is currently set at the level of alcohol duty plus VAT, adding that it was "entirely within the competence of Member States to take steps to prevent alcohol being 'sold cheaper than water' or 'given away as a loss leader'."

It also called on the EU to amend food labelling laws to include alcoholic drinks, which would mean the strength, calorie content, guidelines on safe drinking levels, and a warning about the dangers of drinking when pregnant would be included on the label. "Voluntary commitments are not enough," it said.