Mental health policy and practice across Europe: an overview

Addiction and alcohol 273
Alcohol taxes
There is great variation in alcohol excise levels across EU member states, with a
zero tax on wine in six countries in southern and central Europe, and relatively
high taxes in the United Kingdom, Ireland and the Nordic countries (Österberg
and Karlsson 2004). This is the situation, despite the fact that the EU has made
repeated attempts in the last 30 years to harmonize the alcohol taxes of its
member states on the grounds that different taxes in member countries interfere
with the efficient operation of the single market. In 1987 the Commission proposed
that uniform alcohol excise duties should be adopted in all member
states. In 1992, a target rate was adopted for distilled spirits and minimum rates
for all alcoholic beverages. The minimum rate for wine was, however, set at zero.
By accepting a wide divergence in taxes, the directive effectively puts pressure
on high-tax jurisdictions to lower their alcohol excise duties, but does not pressure
low-tax jurisdictions to raise them. A common structure for excise duties in
the EU, adopted in 1993, also means that it is impossible to put a special tax on a
beverage causing special harm. Beverages within each of the four alcoholic
beverage categories – beer, wine, ‘intermediate products’ and spirits – have to be
treated the same.
Since the harmonization of alcohol excise duties across the EU was not yet a
reality, new proposals were made in 2001. Tax harmonization in the EU is a
good example of the length of time these processes usually take. The EU also
illustrates that once a topic is put on the agenda, the process has a tendency to
proceed, however slowly. For instance, when the harmonization of alcohol
excise duties seemed to be impossible through administrative decisions, the
EU Commission tried to let market forces harmonize alcohol excise duties by
increasing the rights of travellers to take alcoholic beverages across borders
within the EU, thereby putting pressure on countries with higher-tax neighbours
to lower their excise duty levels. As a general rule, EU citizens are allowed
to take with them 10 litres of spirits, 20 litres of intermediate products, 90 litres
of wine and 110 litres of beer from other EU member countries without paying
tax on them when entering their home country.
When market forces put pressure on neighbouring countries to harmonize
their alcohol excise duties in order to decrease the border trade in alcoholic
beverages, taxes tend to gravitate towards the lowest levels of excise duties.
For instance, to counter the effects of the low excise taxes in Germany, Denmark
decreased excise duties on beer and wine by half in the early 1990s. As a
consequence, Sweden decreased its excise duties on beer and wine to counter
the pressure from Danish prices (Holder et al. 1998).
Currently, intra-EU transfers (mainly alcohol) are taxed in the purchase country
for private use, or in the destination country if purchased for commercial
use. The Commission, as of 2004, proposes that private users buying at distance
(i.e. beverages transported on their behalf) should be taxed in the acquisition
country and that the ‘indicative’ limits should be abolished.