Beer: Tax Rates (Hansard, 25 November 1993)

The Minister of State, Department of Transport (The Earl of Caithness)
My Lords, the duty and VAT charged on French beer imported commercially into the United Kingdom is the same as that charged on beer produced in this country.

§ Lord Boyd-Carpenter
My Lords, I thank my noble friend for that obvious Answer. Is he aware that under the present European arrangements it is possible to import duty free any quantity of beer or other commodity for personal consumption? In those circumstances, is not the much higher rate of tax on British beer as compared with French beer a considerable competitive disadvantage to our brewing industry and a temptation to people who go overseas to bring back large quantities of lower-taxed French beer?

The Earl of Caithness
My Lords, it is true that one can go to France and that one can buy duty-free goods, in particular beer, spirits and tobacco, and bring them back for one's personal use. That was part of the Single Market agreement. When it was considered it was estimated that there would be a full year revenue loss of about £250 million from the increased cross-border shopping.

§ Lord Stoddart of Swindon
My Lords, with a £50,000 million deficit, can the Government afford to lose £250 million? Is he aware that the issue applies not only to beer but to all alcoholic drinks and to tobacco? Is not the Chancellor likely to lose an increasing amount of money as people realise that they can go to France, stock up with tobacco, drink and so forth, pay for their fare and probably for the family holiday and still come out with a profit?

The Earl of Caithness
My Lords, the noble Lord is probably wrong because it costs money to go to France and to buy the goods. Therefore, there will not be a profit at the end of the day. The increased cross-border shopping figure of £250 million includes spirits, beer and tobacco.

§ Lord Hailsham of St. Marylebone
My Lords, assuming that the sole object of a visit to France is to buy French beer, how much beer must one buy for one's own consumption in order to pay for the fare?

The Earl of Caithness
My Lords, that would depend on the beer that one bought and the price of the fare.

§ Lord Brabazon of Tara
My Lords, in addition to the £250 million lost to the Revenue in duty, what is the estimate of the loss to the brewing industry and to the Exchequer in tax? In addition, what is the impact on the retail trade, in particular in the south of England, and the impact on jobs in that area?

The Earl of Caithness
My Lords, the £250 million included all the issues which my noble friend raised and more. The Danish Government, when faced with the same problem, reduced the duty on beer and wine in anticipation of the cross-border shopping difficulties. The result has been a net reduction in excise duty revenues compared with previous years.

§ Lord Boyd-Carpenter
My Lords, will my noble friend indicate that the Government take a little more seriously than his earlier Answer suggested the damage to the competitive position of many British producers, not only those of beer, which is caused by the higher rates of duty in this country being affected by the free entry under European arrangements for domestic consumption? Do the Government realise that that is a serious issue for a number of British industries?

The Earl of Caithness
My Lords, I can assure my noble friend that we certainly take the matter seriously. However, perhaps he will agree with me that all member states must retain the freedom to set rates appropriate to their own circumstances.

§ Lord Eatwell
My Lords, will the Minister first answer the question asked by his noble friend Lord Brabazon about the loss to the British brewing industry and to jobs in the industry rather than the loss of revenue to the Government? Does the Minister realise that his statement expressing the Government's persistent hostility to fiscal harmonisation within the EC is exactly what is losing British jobs?

The Earl of Caithness
My Lords, as regards the noble Lord's last remark, the position is quite the contrary. It is because we believe that every country should be able to set its own rates that we remain competitive. That is why our unemployment is on a downward trend and theirs is on an upward trend.

§ Lord Elton
My Lords, do the French take advantage of the reciprocal trade and buy a great deal of duty-free beer in this country to take home?

The Earl of Caithness
My Lords, I think it unlikely, but in other areas of the Single Market I have no doubt that British goods are more competitive than those from other parts of the Continent.

§ Baroness Seear
My Lords, will the Minister confirm that one is allowed to bring into this country 343 goods only for personal consumption? Have the Inland Revenue made an estimate of what, in those terms, "personal consumption" is? That seems to be a decisive factor in calculating the loss to the Revenue.

The Earl of Caithness
My Lords, I can confirm that it is only duty free for personal consumption. The department concerned would not be the Inland Revenue but Customs and Excise, which has people watching this aspect of the trade to make certain that there is not an onward sale in this country.