HC Deb 12 March 1998 vol 308 cc744-5
12. Mr. Gordon Prentice

What the reasons are for proceeding with the abolition of duty free within the European Union in 1999 in advance of harmonisation or equalisation of taxation rates in member states. [32504]

Dawn Primarolo

The Council of Finance Ministers decided unanimously in 1991 to abolish duty-free sales for travellers within the European Union because it saw them as an anomaly within the concept of a single market. However, because of the effects of immediate abolition, and to give operators time to adjust, the Council decided to allow duty-free sales to continue after 1 January 1993, until 30 June 1999. The harmonisation of duties and taxes was not a factor in that decision.

Mr. Prentice

Will not millions of holidaymakers be mystified that duty free is to be abolished in July 1999, given the huge differences in duty within the member states and the fact that proceeding with the abolition could cost 100,000 jobs across the European Union? In this country, 30 million people use duty-free shops annually. I urge my hon. Friend not to be neutral, but to use the presidency of the European Union to argue forcefully for the measure to be postponed until there is full harmonisation of duty across the EU, which I suspect will not happen for many years.

Dawn Primarolo

As my hon. Friend knows, the Government do not object to a study into the impact of the abolition of duties being undertaken, particularly if it examines the nature of the successor regime. Any postponement requires unanimity, however, and there is no suggestion that unanimity of action exists among the 15 member states.

Mr. Wilkinson

Might not Her Majesty's Government at least try to secure a postponement, now that they hold the presidency of the European Union and, supposedly, have such great influence over their EU counterparts? Do they take pride in the fact that the measure will cost hundreds of jobs in a number of companies in air transport, shipping and retailing that are already experiencing extreme competitive pressures. How will the British travelling public benefit from abolition of duty-free sales? Surely it will lead to increased fares.

Dawn Primarolo

I take no pride in the decisions that the Conservative Government made, or their commitment on the phasing out of duty-free. The Government will not stand in the way of a study being conducted into the likely impact on jobs of abolition, but there is no unanimity on the matter at the moment. The hon. Gentleman should direct himself to the question why Conservative Ministers agreed to abolition in the first place.