HL Deb 20 April 1999 vol 599 cc154-5WA
Lord Tebbit

asked Her Majesty's Government

Whether the European Union is empowered to require the increase in tax on sparkling cider imposed by the recent Budget. [HL1885]

Lord McIntosh of Haringey

The European Commission has the responsibility for monitoring and ensuring member states' compliance with treaty obligations. Where there has been a breach of any such obligation, the Commission is empowered to take action to enforce compliance, which may result in the instigation of infraction proceedings against the member state concerned.

In 1995 the Commission drew to the UK Government's attention an apparent breach contrary to Article 95 of the Treaty of Rome, which prohibits the imposition on the products of other member states any internal taxation of such a nature as to afford indirect protection to other products. In its Reasoned Opinion, the Commission deemed that higher strength sparkling cider (a mainly domestic product) and lower strength sparkling wine (a mainly imported product) were in direct competition and that the UK's duty treatment, which favoured the former, was discriminatory. The legal advice taken by the previous government indicated that the UK could not successfully challenge the Commission's assertions.

The UK Government at the time, therefore, gave a commitment to the European Commission, in 1996, to align the rates of duty on higher strength sparkling cider with that on lower strength sparkling wine over a period of time. The duty increase on sparkling cider announced in the recent Budget completes the process of alignment.