VARIOUS: All eyes on the European Court of Justice this week, as fate of "booze cruises" lies in hands of judges

It's known as the "booze cruise" - swarms of Britons ferry over to France for the day purely to buy cheap alcohol and cigarettes. It's worth the trip because by going there in person they pay only local French not the much higher UK taxes. And an upcoming European court ruling due later this week could make it even easier for Europeans to buy alcohol and tobacco at rock bottom prices. The European Court of Justice is set to rule on a case bought by a Dutchman who argues he should have been allowed to buy French-duty paid wine for delivery back in the Netherlands without being subject to Dutch taxes too. As the law currently stands individuals are only exempt from tax in their home countries, if they personally purchase and transport the goods themselves for private use. This is precisely the reason why so many Britons, who are subject to one of the highest duties on alcohol and tobacco within the EU, descend on Calais to stock up on wine, beer and cigarettes at the massive supermarkets near the Port. Outside the supermarket the clink-clink of bottles can be heard across the bustling car park as Brits load up their vehicles with boxes of booze, making considerable savings by avoiding UK duty. One British woman complains about the high taxes levied by her government if she had bought the stocks of alcohol at home. "At this time of the year they (the UK Treasury) just lose out on so much taxes and then each November they put the taxes up again don't they. So, on alcohol on cigarettes, that's what people really want, that's why we are here," she explains. Chief Executive of the Wine and Spirit Trade Association in the UK, Jeremy Beadles, says the case is being watched closely not only by the UK Treasury, but by wine merchants in Britain, who could lose customers if the ECJ ruling sides with the consumer. "Around Europe there are lots of varying levels of tax. For example, in the United Kingdom we pay one pound twenty nine a bottle on a bottle on wine and in France they pay two pence and in twelve other member states they pay zero tax on a bottle of wine," he said. "There are some quite serious implications if people are allowed to import wine from around the rest of Europe without paying tax on it," Beadles added. One of those implications could be that people would be able to buy alcohol and tobacco online or over the phone from another EU state where taxes are much lower. One such country is Lithuania, where tax is minimal. For example a pack of cigarettes costs around 7.80 Euros in Britain, but in Lithuania the same pack costs only 1 Euro. Romas Apulskis, President of the Lithuanian Association of Companies Trading in Alcoholic Beverages said, "We think that this proposal before the European Court of Justice is right, since it is in accordance with free trade within the European Union." But he acknowledged that given the difficulty of shipping heavy bottles of booze, customers may not rush to order online from Lithuania, "We are sceptical about commercial success of this decision, because shipment costs (alcohol) can be big and we don't think customers will change the way they buy alcohol very quickly," he said. Britain has one of the highest tax rates on alcohol within the EU. This financial year alone UK Treasury expects to make 16 billion pounds (30 billion U.S. dollars) in duties from domestic tobacco and alcohol sales. But the Treasury and wine merchants caution against jumping to conclusions about what any ECJ ruling might mean. "At this moment in time it is all speculation and until we do know what the decision is certainly our message out to our members, and the position are members are taking, is don't do anything rash - wait and see what the decision holds, it's unlikely to be straightforward, and then look at it and maybe make adjustments if it is necessary," said Jeremy Beadles of the WTSA. The ECJ is set to issue its ruling on Thursday (November 23) at 0830gmt. It will be analysing a report from its advocate general or advisor, who recently recommended that individuals should not be subjected to domestic tax on items purchased overseas. In the past the court has backed the advocate general in 80 percent of cases. But with finance ministers from the UK and other high-tax levying countries lobbying the court hard to be sympathetic to its concerns the ruling may not be simple. Whatever happens on Thursday, the case has bought into sharp focus the contrasts between alcohol tax levels in different EU countries, leading to calls for greater tax harmonisation across the continent.

ITN Source | November 22, 2006

Tags:. .unlikely. .sharp. .fate. .argues. .speculation