Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-11-14-Speech-3-355"
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"en.20011114.13.3-355"2
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". – Mr President, the position taken by the Committee on Economic and Monetary Affairs on the proposal under discussion has surprised me. It diverges considerably from the position taken by this Parliament in 1996. At that time, Parliament urged the Commission to make proposals for upward harmonisation of tobacco prices, based upon higher duty rates across the Union for reasons including health protection, and to consider measures to reduce the scope for price manipulation by cigarette producers applying widely diverging pre-tax on the markets of each Member State. The present Commission proposal is consistent with that opinion.
I was pleased to hear both Mrs Stihler and Mr Blokland support the view of the Commission that there is a direct link between price and quantity consumed and that therefore the price very definitely has a bearing on health. Mr Folias said that if the price goes up then cheaper cigarettes will be purchased and smoked. According to that reasoning, if the price went down then more expensive cigarettes would also be purchased. That is something that, in reality, is not noticeable. Therefore, with all due respect to Mr Folias, his reasoning is not in line with reality.
While I am answering specific questions by Parliament, I have to say that I do not understand the argument by Mr Wieland – referring to the legal aspects of the case – when he says that the interplay of VAT and excise taxes would be illegal. Of course they have a bearing on competition and smuggling, as we all know, but why should this be illegal, as he maintains?
The point of view of his committee is based on the legal state of affairs. He says that there is a problem in that cigarillos of a certain dimension and character should be treated as cigars and not as cigarettes. Well, I have some here. If you showed an average citizen of the European Union this packet of cigarillos, took one of them out – of the same dimensions and weight as an ordinary cigarette – and asked them if it was more like a cigarette or more like a cigar, I would wager Mr Wieland 144 packets of cigarettes or cigarillos – whichever he prefers – that the average citizen of the European Union would classify them as cigarettes.
Most of the amendments proposed in Mr Maaten's opinion have been retabled for this plenary. The Commission broadly shares these concerns on the need to pay more attention to health policy. But the amendments require no change to the proposal. According to the existing review requirements, the Commission already has the obligation to take into account the wider Treaty objectives, including health. New developments, resulting for instance from the conclusion of a WHO framework convention on tobacco control, will thus automatically have to be taken into consideration in a subsequent review.
The Commission and the Member States have also taken a number of initiatives to combat fraud and smuggling following the conclusions of the high-level group on fraud in the field of excise duties.
To conclude, for the reasons I have given, the Commission is still convinced of the merits of its proposal and still considers the proposals by the Commission to be a direct reply to Parliament's own opinion expressed in 1996. Therefore the Commission invites all Members of Parliament who have expressed an opinion contrary to that of the Commission to reconsider their position on this issue very carefully before tomorrow's vote.
That is why I say that the advice of the Economic and Monetary Affairs Committee has greatly surprised me. The Commission is doing what Parliament wanted in 1996 and therefore it is odd that the report should not accept the Commission's proposal. The changes proposed will bring about increased convergence in duty rates within the European Union and, as such, improve the functioning of the internal market, both now and as it will be after enlargement. They will also reduce the incentive for excise fraud within the Union.
More surprisingly – and Mr Blokland has just drawn attention to this – the draft report does not set out the reasons for rejecting the Commission proposal. That is the least that the Commission would have expected. According to the working document presented by the rapporteur to EMAC in June, the main justification is that the introduction of a minimum amount of taxation of EUR 70 for cigarettes constitutes a shift towards specific taxation, and would disadvantage small- and medium-sized producers in southern Member States.
I would like to emphasise that this is emphatically not the view of the Commission. The introduction of a fixed amount in euro does not alter the structure of excise duties on cigarettes. Member States affected by the introduction of the fixed amount will retain the flexibility they enjoy at present to determine the proportions of the specific and
components of cigarette taxation, as other rules remain unchanged.
I would also like to point out that the Commission proposal has received broad support in the Council. Last week in the Ecofin Council the Member States unanimously agreed a compromise text produced by the Belgian Presidency, which is clearly in line with the Commission's proposal. For cigarette taxation, the most significant element is the introduction of a minimum amount of duty of EUR 60 at the initial stage and EUR 64 at a later stage, rather than the EUR 70 proposed by the Commission.
The adoption of the proposal is also extremely important in view of the forthcoming enlargement of the Union eastwards. Mr Folias has quite rightly drawn our attention to that aspect of the proposal. The existing minimum taxation requirement – the so-called 57% rule – allows for a higher degree of price manipulation and would not in itself be sufficient to reduce to a sustainable level the gap between the tax and price levels of the present Member States and the candidate countries.
Such a situation would result in substantial revenue loss for present Member States, especially those having borders with candidate countries. The requirement for a minimum amount of duty will avoid this happening and ensure the proper functioning of the internal market after enlargement. The Commission is aware that achieving the amounts in euro will require a significant effort from most candidate countries. Therefore, it has proposed that the Council grant limited transitional periods to candidate countries for reaching the minimum rate of taxation.
Next, I was pleased to see that the two Parliament committees that have issued opinions on the proposal – the Committee on the Environment, Public Health and Consumer Policy, with Mr Maaten as draftsman, and the Committee for Legal Affairs and the Internal Market, with Mr Wieland as draftsman – accepted the general thrust of the proposal, subject to a number of amendments.
Most of the amendments proposed in Mr Maaten's report have been re-tabled in this plenary. The Commission broadly shares the concerns of Mr Maaten on the need to pay more attention to health policy and to combat fraud and smuggling. I do not see why Mr Katiforis cannot accept the arguments relating to health. It is a well known fact – and I am sure he is aware of it – that 75% of smokers started before the age of 18. Report after report and study after study confirm that for young people under the age of 18, price clearly is a determining factor in terms of smoking."@en1
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