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Harpers leader:EU ruling a relief for small firms

Published:  18 January, 2007

Well, well, who'd have thought? The European Court of Justice overturns a recommendation to harmonise tax rates across the continent, which would have enabled consumers to buy alcohol and tobacco but avoid paying domestic import duty.

It's interesting to see how the ruling has been taken by retailers in the UK. The big guns such as Tesco and Sainbury's were, by all accounts, ready and waiting with contingency plans and alternative arrangements in other European countries.

But the biggest impact this decision has had has been on the smaller retailers. Some claimed that if duty rates had been harmonised, that would have meant the end for their business. The ruling should ensure their survival, at least in the short term.

The news was also well received by the UK Government, which makes a cool 16 billion a year in revenue from alcohol and tobacco duty.

So the decision prevented the unenviable task of it having to raise a sizeable chunk of cash from the taxpayer in other areas.

One can understand the logic of the European Court to some extent. After all, the price of goods in a particular country is dependent on so many economic factors, so is it right that consumers can beat the system in this way? Or on the other hand, is this ruling a kick in the teeth for those who would have us believe that there is a free market in Europe? Either way, planned EU draft legislation means that this story is not going to go away.

Stuart Peskett