Czechs oppose alcohol duty reform

The Czech Republic is fearful taxes could harm its beer market

Attempts by EU finance ministers to reform alcohol taxes have been thwarted by opposition from the Czech Republic.

The 4.5% proposed minimum duty on beer and spirits was vetoed by the Czech Republic, marking the second attempt in a month to change duties on alcohol.

The Czech Republic, a big producer and consumer of beer, said the tax - which applies to beer and port but not wine - would unfairly help wine producers.

However, the same meeting saw ministers agree to boost duty-free allowances.

It is clear there is competition between wine and beer. We don't agree with a disadvantage for a typical Czech product like beer Vlastimil Tlusty Czech Finance Minister

People arriving by air or boat to the EU will be able to bring in up to 430 euros ($564; £289) worth of duty-free goods, up from the previous limit of 175 euros.

Land travellers meanwhile will have a limit of 300 euros, also up from the same level.

The difference between the two is in an attempt to keep booze cruises under control.

The increased allowances are meant to reflect the rise in inflation since the limits were last set more than 10 years ago, but attempts to do the same for alcohol have met opposition.

'Disadvantage'

The issue of alcohol tax has caused controversy since new member states joined the EU in 2004.

"It is clear there is competition between wine and beer. We don't agree with a disadvantage for a typical Czech product like beer," said Czech finance minister Vlastimil Tlusty.

The proposed 4.5% duty on beer and spirits was far lower than the initial European Commission suggestion of 31%.

Wine has been absent from the list of alcoholic goods to be taxed, following requests from France, among others, and it is expected that any move to set a minimum duty on wine would elicit further opposition.

Following the veto by the Czech Republic, ministers have requested that the European Commission examine how all types of alcohol is taxed and collect their findings in early 2007.

When Germany takes control of the EU presidency in January, it will face the task of addressing alcohol taxes again.

Ministers failed to come to agreement on value added tax but have a June deadline to do so.