Local view for "http://purl.org/linkedpolitics/eu/plenary/2002-02-05-Speech-2-053"
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"en.20020205.4.2-053"2
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".
Commissioner, Mr President-in-Office of the Council, ladies and gentlemen, Article 93 of the Treaty states that efforts must be made to harmonise excise, that Parliament must be consulted in this procedure and that the aim of the Treaty is to harmonise taxation to the extent that harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time-limit laid down in Article 14. Of course, Article 14 expired a long time ago, back in December 1992; however, as the internal market has not quite been completed, the purpose of the Commission's first proposal was to serve the objectives of Article 93, with which we have no choice but to agree, given that they derive directly from the Treaty.
Because Parliament has a consultative role in the matter, the Council is pushing for a fast response from us. The Commission too has put pressure on Parliament, brandishing the fact that the Council is in unanimous political agreement on the matter, so all that is left is for us to endorse the Council's and the Commission's
. This was, in my view, an unfortunate way of dealing with Parliament, especially on the part of the Commission, because it is tantamount to asking Parliament merely to endorse a
without making any contribution of its own whatsoever. Our purpose in life is not to sign blank cheques, Commissioner. And, may I say to the Council that I trust that its haste in requesting an urgent procedure does not mean that it is merely going through the motions and that it will give serious attention to Parliament's opinion, into which, I can assure you, we have put a great deal of thought.
Parliament has already rejected the previous Commission proposal by a large majority. The main tenet of that proposal was to impose a minimum fixed tax of EUR 70 per 1000 cigarettes, alongside the minimum 57% tax charged on the most popular market brand. I do not want to go into the technicalities of how this tax is calculated at this point.
Parliament rejected the proposal because it accepted the following arguments: first, imposing a minimum fixed tax would put small and medium-sized tobacco companies at a distinct disadvantage. Assuming that the only way a small tobacco company manages to get its most popular brand on to the market is by reducing the price, it immediately faces a heavy fixed tax which bears no relation to its production costs, putting it at a disadvantage in relation to large tobacco companies. Secondly, the immediate effect of the Commission proposal was to increase prices in southern countries, where per capita income is lower than in the northern countries in the main zone of the Union. Insofar as taxes were harmonised, they were harmonised upwards, by increasing prices. Parliament had, in fact, called for this sort of harmonisation in the past, but it was clear from the last vote that the new Parliament voted in took a different view and in 1996 and 1999, Commissioner, the rapporteurs voted against the Commission proposal.
I believe that Parliament is now convinced that constantly increasing the price of cigarettes does not achieve the objective, which I support, of reducing smoking; all it does is to reduce legal sales of cigarettes and encourage cigarette smuggling which, in some countries, has reached worrying proportions. In addition, the Commission proposal would result in astronomical price increases in candidate countries of 200% to 400%. Consequently, the Commission's old proposal, which in essence forms the basis for the Council's political agreement, does not serve the purpose of Article 93 because it tends to destabilise rather than consolidate the internal market.
However, as the Commission and the Council are determined to stand by their initial position, although they have no reason to do so, the Committee on Economic and Monetary Affairs has asked me to table a compromise proposal. This proposal is as follows: the Council can adopt the Commission's initial ideas and Parliament will withdraw its opposition to them. However, it will call for an alternative method of harmonising taxes. This alternative will be based on a combination of minimum excise duty of 57% plus a minimum value added tax of 15% which, once the relevant mathematical formula has been applied, gives a harmonised tax of around 71%. So what we propose is to introduce two methods of taxation and to allow the Member State in question to choose between them.
The pros of this solution are as follows: first, it will not push up prices and put the industry in certain Member States in the south at a disadvantage. This is, of course, vital to the candidate countries, as I have already said. Secondly, it will help to harmonise prices, in that we already had price convergence with the minimum 57% tax and it was the value-added tax which was causing the fluctuations. Consequently, our new proposal does more for harmonisation than the Commission proposal. Thirdly, it allows Member States to protect their small and medium-sized enterprises from distortions of competition caused by imposing a fixed tax. And by shifting the focus away from price increases on cigarettes, these measures will discourage smuggling.
I think the Council should show courage and imagination, accept the two different versions and leave the final decision to the Member States. I am positive that the new proposal, which I am confident my fellow Members will support, has so many advantages that the Member States will opt for it and we shall soon have just one system of harmonised taxation.
Allow me to finish, Commissioner and members of the Council, by saying that I, too, want to see smoking reduced. But I do not think that we can do so by constantly hiking up prices. Cigarettes are already extremely expensive in Europe and smoking shows no signs of abating. Which is why I am against the amendments tabled by Members trying to support the anti-smoking campaign by raising prices. I do not think the price mechanism can be used to achieve everything. There is much that it can be used to achieve, but not everything, which is why I am against these proposals. This is my compromise proposal to Parliament and I call on the Commission and the Council to take it seriously and not to look on it as a mere formality, because that would be insulting to Parliament."@en1
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