§ Mr. David StewartTo ask the Chancellor of the Exchequer how many representations he has received in support of his proposal to introduce strip stamps. [161484]
§ John HealeySince the Chancellor's announcement in the Pre-Budget Report that the Government were considering introducing tax stamps for spirits, Treasury Ministers and Officials have received a wide range of representations on this and on the spirits industry's alternative package of measures. Those representations acknowledge that spirits fraud is a serious problem and needs to be addressed but differ in their views on how to tackle this effectively. The main concerns highlighted related to the impact and compliance costs of tax stamps. In making his decision that tax stamps are necessary to tackle spirits fraud, the Chancellor took account of concerns raised and announced on Budget Day that he will help the trade financially with the cash-flow costs and capital investment associated with the introduction of tax stamps. He also announced that there would be a further freeze on spirits duty—for the seventh Budget in a row and, indeed, that spirits duty will be frozen for the remainder of this Parliament.
Officials are working with the industry to consider how the offsetting measures can be effectively targeted and applied and to develop the detailed arrangements for tax stamps in a way that minimises additional burdens on business and causes minimal disruption to the trade's operations.
§ Mr. David StewartTo ask the Chancellor of the Exchequer what assessment he has made of options for the elimination of spirits duty evasion other than the introduction of strip stamps. [161485]
§ John HealeyThis Government have given exhaustive consideration over recent years, in close consultation with the alcohol industry, to finding ways to tackle the serious problem of spirits duty fraud.
848WHM Customs and Excise held a formal consultation on tax stamps in late 2001 and early 2002. They conducted a further formal consultation in the summer of 2003 on regulatory options for reducing opportunities for fraud in the alcohol holding and movement system.
Partly as a result of those earlier discussions, a number of measures have already been put in place or are planned to tackle spirits fraud. These include the creation of a Joint Spirits Fraud Task Force in 2002 and the development of draft Memoranda of Understanding between Customs and key spirits trade associations. Customs have also strengthened their operational response to fraud, including the creation of a National Discreditation Team to detect illicit loads which were destined to be diverted after arrival in the UK.
Despite these ongoing efforts, Customs' estimates, published alongside I he Pre-Budget Report in December 2003, showed that around £600 million of revenue was lost through spirits fraud in 2001–2002. The Government therefore announced that tax stamps for spirits would be introduced from 2006 unless the industry put forward alternative measures that would be as effective as tax stamps in combating fraud.
There has been a further intensive period of discussions with the industry since December on all aspects of tax Stamps and alternative options. The industry put forward an alternative package of 17 proposals. However, as announced in the Budget, the Government's assessment is that the anti-fraud impact of the alternative package falls significantly short of that estimated for tax stamps. The package contains inherent weaknesses: it leaves the door open for displacement to other types of fraud, most notably inward diversion; it stands to be undermined by a complicit party; and unlike tax stamps it dot s not tackle the problem of identification—the ability for consumers, retailers and Customs officers to distinguish readily between licit and illicit products.
A full assessment of the industry's package of alternative proposals to tax stamps will form part of a Regulatory Impact Assessment, to be published alongside this year's Finance Bill.
§ Mr. David StewartTo ask the Chancellor of the Exchequer what research he has conducted on fraudulent production of strip stamps in other countries; and what security measures he proposes to guard against the fraudulent production of strip stamps in the UK. [161486]
§ John HealeyOfficials from HM Customs and Excise have contacted forty countries which operate tax stamps to discuss their regimes and experience of fraudulent strip stamps. From the twenty-five detailed responses received it is clear that fraudulent production can be limited by the use of anti-counterfeiting measures.
In addition, Customs have conducted a series of discussions with security printers and other experts in anti-counterfeiting technology. This has revealed a wide range of overt, covert and forensic features which could be used to protect UK tax stamps from counterfeiting.
Customs will continue detailed discussion's with the industry and continue to draw on a wide range of expert opinion's in their work on implementation of tax stamps for spirits in the UK.
849W
§ Mr. David StewartTo ask the Chancellor of the Exchequer how many(a) UK distilled and (b) imported products will be affected by the introduction of strip stamps. [161637]
§ John HealeySubject to certain exceptions, to be determined following further discussions with the industry, tax stamps will apply to retail containers of spirits, and to wine and made wine with a strength exceeding 22 per cent. alcohol by volume.
The requirement for UK retail containers of spirits to bear a tax stamp will, however, apply equally both to imported and to home produced goods.