§ Baroness Noakesasked Her Majesty's Government:
Whether they have concluded their review of the use of tax strips for alcohol excise duty. [HL1478]
§ Lord Davies of OldhamTreasury Ministers and their officials are continuing to consult the industry on both the impact of tax stamps for spirits and the industry's proposed package of alternative measures for reducing fraud.
§ Baroness Noakesasked Her Majesty's Government:
What is their estimate of the compliance cost for United Kingdom businesses in terms of (a) one-off costs and (b) annual costs if tax strips for alcohol excise duty were introduced; and [HL1479]
On which businesses or business sectors the costs of compliance with tax strips for alcohol excise duty would fall if they were introduced; and [HL1480]
What are the cash flow implications for United Kingdom businesses of the introduction of tax strips for alcohol excise duty, analysed by business sector. [HL1481]
§ Lord Davies of OldhamThe Government announced in the Pre-Budget Report that they intend to introduce tax stamps for early 2006 as part of a reinforced strategy to tackle alcohol fraud. Tax stamps would apply only to spirits, as that is the sector in which fraud is estimated to be particularly high. The Government have also invited the industry to put forward alternative proposals which would be equally effective in tackling fraud. Both the practicalities of tax stamps and possible alternative proposals are being considered now in detailed discussions with the industry.
The costs of compliance for different sectors of the industry would depend on the measures taken to implement tax stamps, and on any measures the Government might introduce to offset that impact. The Government have said that they would consider how the current deferment arrangement for spirits duty could be extended as far as practical in recognition of the cash flow effects of purchasing tax stamps, and freezing spirits duty for the remainder of this Parliament.
A full regulatory impact assessment will be produced if the Government proceed with this measure. This would make clear which business sectors would incur compliance costs, and what the nature and scale of those costs (one-off, annual, cashflow) would be.
§ Baroness Noakesasked Her Majesty's Government:
What is their estimate of the loss of alcohol excise duty each year due to fraud; and what are the assumptions on which the estimate is based. [HL1482]
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§ Lord Davies of OldhamHM Customs and Excise's latest estimate of the revenue loss (including duty and VAT) from alcohol fraud in 1999–2000,2000–02 and 2001–02 are available in its annual report published in December 2003, (HC52). An estimate for 2002–03 is not yet available.
The assumptions used to produce these estimates are set out in Customs' paper Measuring indirect tax fraud published in November 2001, a copy of which is available in the Library. Subsequent improvements to the methodology are described in the follow-up papers: Measuring indirect tax losses ( 2002) and Measuring and Tackling Indirect Tax Losses (2003).
§ Baroness Noakesasked Her Majesty's Government:
Whether any countries operate effective tax strip systems for alcohol excise duty; and, if so, which. [HL1483]
§ Lord Davies of OldhamTax stamps have been introduced in 40 different countries for a variety of reasons ranging from quality assurance to tackling alcohol fraud.