‘Lid Levy’ could breach EU law

"The overall argument against the Lid Levy is that it would seem to affect free competition.”
"The overall argument against the Lid Levy is that it would seem to affect free competition.”

Any proposed ‘Lid Levy’ on alcohol off-sales “would likely be in breach of the EU Excise Directive concerning the general arrangements for excise duty” according to information received by the National Off-Licence Association from the Department of Finance.

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3 September 2013

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This assessment was based on a similar case which failed in the European Court of Justice.

Furthermore, in December last year Brendan Griffin TD asked the Minister for Finance Michael Noonan why the vintners’ Lid Levy proposal (estimated to be worth €250 million to the Exchequer) was not being adopted in Budget 2013.
The Minister responded that preliminary evidence suggested that the proposal “may not be consistent with the EU Directive concerning the general arrangements for excise duty on alcohol products”.

The EU has ruled against such discriminatory moves in the past. According to research undertaken by NOffLA, a joint case against France, Ireland and Austria’s fixing minimum retail prices for cigarettes, while focusing on tobacco (and tobacco-relevant directives), has relevance to alcohol policy too.

“In the case of Austria it sought to apply a minimum price to fine cut tobacco for the rolling of cigarettes and the court found that ‘the proportional excise duty and the amount of the specific excise duty must be the same for all cigarettes’,” explained NOffLA Chairperson Evelyn Jones, “Thus when applied to alcohol, excise for the on- and off-trade must be the same. Legislation in France, Austria and Ireland fixing minimum retail prices for cigarettes infringes European Union Law.

“The ECJ stated that the only way that Austria could seek to implement such a pricing system would be if “it is structured in such a way as to ensure, in any event, that the competitive advantage which could result from some manufacturers and importers of those products from lower prices is not impaired.”

Where the Lid Levy breaches EU law
She pointed out that Council Directive 92/83/EEC provides for the taxation of alcohol on the basis of volume and content and breaks alcohol into specific excise duty categories for various alcoholic drinks.

“These rates are applied to all alcohol and make no distinction between on- or off-trade,” she says, “Thus to apply a ‘Lid Levy’ to a container in which alcohol is sold while at the same time not applying the same tax rates to the on-trade would not equate with the provision of the Directives in this area. The overall argument against the Lid Levy is that it would seem to affect free competition.”

 

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