EC as regards the structure and rates of excise duty applied on manufactured tobacco - Main contents

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dossier	COM(2001)133-2 - Amendment of Directive 92/79/EEC, Directive 92/80/EEC and Directive 95/59/EC as regards the structure and rates of excise ...
document	COM(2001)133
date	February 12, 2002

(1) In accordance with Article 4 of Council Directive 92/79/EEC of 19 October 1992 on the approximation of taxes on cigarettes(4) and Article 4 of Council Directive 92/80/EEC of 19 October 1992 on the approximation of taxes on manufactured tobacco other than cigarettes(5), an in-depth review of the rates and structure of excise duties on tobacco products has been carried out.

(2) The Commission's first report on the subject, of 13 September 1995, merely drew attention to certain difficulties encountered in implementing the Directives, without proposing any specific solutions.

(3) The Commission's second report, of 15 May 1998, examined the necessary technical amendments, which were mainly to do with adjusting the incidence of the overall minimum duty on cigarettes, but kept the structures and rates of duty unchanged. The report, submitted to the Council on 18 May 1998, included a proposal for an amending Directive(6).

(4) The proposals made by the Commission were largely adopted in Council Directive 1999/81/EC of 29 July 1999 amending Directive 92/79/EEC on the approximation of taxes on cigarettes, Directive 92/80/EEC on the approximation of taxes on manufactured tobacco other than cigarettes and Directive 95/59/EC on taxes other than turnover taxes which affect the consumption of manufactured tobacco(7).

(5) An analysis of the changes of prices and excise rates for tobacco products in the Community shows that there are still considerable differences between Member States which may disturb the operation of the internal market as it is now and as it will be after enlargement.

(6) Greater convergence between the tax rates applied in the Member States would help reduce fraud and smuggling within the Community. The introduction of a fixed minimum amount expressed in euro, in addition to the minimum excise incidence of 57 % of the retail selling price of cigarettes of the price category most in demand, will ensure that a minimum level of excise duties is levied on such cigarettes. Member States for which the immediate introduction of this fixed minimum amount expressed in euro would be problematic for economic reasons, should be authorised to postpone the implementation of this new requirement until 31 December 2004 at the latest. Member States which already levy a high level of excise duty should be allowed greater leeway in setting the rates. A further increase of the fixed minimum amounts, on 1 July 2006, should be foreseen. In view of the economic difficulties that could be caused by the implementation at this date of this increased amount, the Kingdom of Spain and the Hellenic Republic should be authorised to postpone its implementation until 31 December 2007.

(7) The Treaty requires that the definition and implementation of all Community policies and activities ensure a high level of human health protection. Cigarettes and fine-cut tobacco intended for the rolling of cigarettes are both harmful to consumers' health. The level of taxation is a major factor in the price of tobacco products, which in turn influences consumers' smoking habits. For this reason, it is necessary gradually to bring the minimum rates for fine-cut rolling tobacco closer to the minimum rate for cigarettes.

(8) In order to avoid a fall in the value of the Community minimum rates of duty on cigars, cigarillos, fine-cut tobacco intended for the rolling of cigars and other smoking tobaccos, a phased increase in the minimum rates, expressed as a specific amount, is needed.

(9) Any harmonisation of the structures of excise duties should be such as to prevent distortions of competition between different categories of manufactured tobacco belonging to the same group and thereby facilitate access to the domestic markets of the Member States.

(10) In the interests of uniform and fair taxation, the definition of cigars and cigarillos, set out in Council Directive 95/59/EC of 27 November 1995 on taxes other than turnover taxes which affect the consumption of manufactured tobacco(8), should be adapted so that a type of cigar which is similar in many respects to a cigarette is treated as a cigarette for excise purposes.

(11) The Federal Republic of Germany should be authorised to postpone the implementation of this new definition until 31 December 2007 at the latest, in view of the economic difficulties that immediate implementation could cause for the German operators concerned.

(12) Member States should be given more effective means to deal with unfair pricing practices or the appearance of products which disrupt the market. This objective can be achieved by authorising Member States to levy a minimum excise duty on cigarettes on condition that it does not exceed the excise duty levied on cigarettes of the price category most in demand.

(13) It is necessary to provide for a regular review procedure. However, a four-yearly review period would be more appropriate, to allow time to evaluate the amendments introduced by this Directive.

(14) Directives 92/79/EEC, 92/80/EEC and 95/59/EC should therefore be amended accordingly.