Government set for clash with EU over refusal to reduce duty rates
The Government is on a collision course with the EU over Customs and Excise practices. New measures announced have sent a clear signal that the Government plans to continue enforcing limits on cross-channel imports rather than reducing UK duty rates.
Building on its controversial use of more customs officers at channel ports, Customs and Excise will now have additional resources to tackle spirits fraud.
The Government estimates that it loses £450m in duty a year through sales of spirits which are diverted by fraudulent traders from duty-free channels into the normal retail market.
The Government claims that since 170 extra Customs officers were deployed last year the results have been good, with smuggling of beer almost eliminated and smuggling of wine and spirits more than halved.
The EU believes that high levels of smuggling and duty fraud in the UK would be better tackled by reducing duty levels to bring them more in line with the rest of the EU.
European officials have already criticised British Customs and Excise officers' "heavy-handed" approach.
European commissioners are unhappy with the large amount of vehicles being confiscated by UK Customs officers. They have criticised Customs for enforcing EU guidelines on the amount of alcohol a traveller can import as a legal limit - which it is not.
Last month the European Commission began legal action that could force Britain to reconsider its position on smuggling.
The EC also wants to introduce harmonisation of duty across member states. This would mean low-tax countries such as Spain would have to raise duty while high-tax countries like Britain would be forced to drop duty levels. But although the proposals have been welcomed by the trade, which has been campaigning for a cut in taxes for many years, the Treasury has maintained it will not consider it.
Customs minister Paul Boateng said: "The criminals engaged in fraud rob our public services or revenue, undermine honest businesses and use the proceeds to fund other forms of organised crime. We are determined to crack down on fraud wherever it occurs."
Related stories:
European commissioner criticises UK alcohol taxes (22 November 2001)
UK booze prices could be slashed (5 November 2001)
Wetherspoon boss anger at high tax (1 November 2001)
EC takes legal steps against Customs (26 October 2001)