Taxing Cigarettes and alcohol

The EU’s Court of Justice is likely to rule today that it is legal for people in the UK to circumvent the tax system by ordering cigarettes and alcohol by mail order from another EU country.

The ruling would reverse a previous decision that stopped Death Cigarettes running exactly this kind of scam a few years back.

It’s a worrying development of the very worst sort of “competence creep” as the Euro-wonks call it. That’s the notion that the EU gradually expands the areas in which its powerful non-elected institutions (the Court of Justice, the Commission and the Council) have power over the democratically elected governments of its member states.

Last year, a ruling on Marks & Spencer’s disastrous foray into France, Germany and other EU countries gave the company the right to write-off millions of pounds of tax revenue.

The latest decision would probably see a rise in smoking and drinking as prices come down. It would also see a huge rise in the black market for booze and fags, as it becomes even easier to get them from abroad legally and then sell them on. It just seems that public health and the use of tax funds to pay public services are not the important thing facing the European Court of Justice. Their only consideration in this will presumably be pushing the single market forward.

Now, The Daily likes the idea of a social Europe as much as the next blog. We like trips to Paris, gap years in Spain, the working time directive and purple passports. However, we have to face the fact that the main focus of the EU, certainly over the last decade or two, has been pushing the free market on member states at the expense of “market barriers” like tax revenue and contracted public services.

Update****

Probably fair to say it wasn’t The Daily’s finest moment when we posted this story about ten minutes before the European Court of Justice ruled against the liberalisation of booze and fags across Europe. In our/my defence, it is very rare for the Court to rule against a preliminary ruling.

Anyway, it’s always a pleasure to see an outbreak of good sense in the ECJ, even if it means eating a little humble pie in The Daily’s dingy basement office.

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7 Responses to Taxing Cigarettes and alcohol

  1. Ian G says:

    Erm, I’m no expert on the finer points of EU law, but the Beeb are now reporting that ECJ have in fact ruled the other way! UK government hailing a victory for common sense.

  2. nick says:

    Yes, looks like exactly that. Though the general issue about competence creep and market-oriented integration remains a good one. It’s only a matter of time before another company finds another way to use EU law to get out of paying taxes or fair wages…

  3. Isn’t there are strong argument that it’s extremely difficult to operate a ‘single market’ without tax harmonisation?

  4. It’s an interesting one bobblehat – Oskar Lafontaine certainly argued, from a left wing point of view that it’s necessary.

    I’ve always seen a problem with it though. The EU doesn’t command the same legitimacy that the national governments do. That would make tax centralisation impossible. The danger is then that they don’t have the authority to raise taxes where necessary. On harmonisation, I can’t imagine the EU of 2006, with member states that have flat rates, using harmonisation to keep taxes at a progressive level. I think if there’s harmonisation, it’s far more likely that it will be regressive.

  5. I don’t generally support tax harmonisation but I think it’s disingenuous to for the EU to claim to be a single market if it doesn’t have it – at least in terms of sales duties (it’s a different, though obviously not unconnected, question in terms of taxes on income and profits.)

    I think there is a good argument for harmonisation of the more politicised duties on cigarettes, alcohol and – probably most significantly – petrol (and similar fuels).

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