Germany: Government blocks the European Commission plan to make beer more expensive

Germany, fearing a backlash from beer drinkers back home, said November 07 it will block a European Union proposal to raise minimum tax rates on alcohol by 31 percent, Associated Press released November 07.

Deputy Finance Minister Thomas Mirow told reporters that while Berlin is not against an alcohol tax in general, it did not want to burden German beer drinkers - who already face a hike on standard sales tax starting in January - with an additional fee.

"Germany is not against alcohol tax but Germany is against beer becoming more expensive," Mirow said. "We have made clear that because of the sales tax raise, we have no manoeuvring space."

The Czech Republic, Latvia and Lithuania also spoke out at EU finance ministers' talks against the higher tax.

German diplomats said it was "an emotional issue" that Germany could only support if beer was exempted. Diplomats said Spain, Portugal, Italy and Cyprus also want opt-outs that won't raise the cost of their national drinks.

However, the European Commission so far has refused to bend to their wishes. Ministers need to vote unanimously for any changes to the tax law, so any veto would torpedo the plan. They are likely to return to the issue in future months.

The European Commission - backed by the Nordic countries - was asking EU finance ministers to update the EU-wide sales tax rates on all alcoholic drinks to take into account the rises in inflation since the levy last was recalculated in 1993.

The commission says it is needed to prevent smuggling and to create a fair playing field across all 25 EU nations. It claims the real impact would be minor - just €0.1 per half-liter of beer.

EU finance ministers also failed November 07 to agree on higher limits for the amount of duty-free goods travellers can bring into the EU, again to update the rate set in 1994.

A compromise suggesting a €350 (US$445) maximum, up from the current €175 (US$223) limit, fell apart when Britain demanded that non-euro nations be able to calculate their own rate of exchange.

France and the Netherlands opposed the proposal, saying it risked creating major differences among EU nations.

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