Large differences in excise duties across EU member states can cause market distortions such as in the fuels sector, but harmonising taxes might not be a practical solution, according to Nationalist MEP David Casa.

Mr Casa has just been appointed European Parliament rapporteur on excise duties reform with a remit to propose a better legal basis for the introduction of an automated system that enables countries to exchange information on excise duties.

The varying levels of excise duty do not fall within the scope of Mr Casa’s work, but he insists that the automated system would introduce new controls to ensure there are no large-scale attempts to profit from variations in duty rates across the internal market.

Harmonisation would be the simplest way to reduce market distortion, but Brussels has no remit to harmonise excise taxes unless there is unanimous agreement among the member states.

Mr Casa acknowledges that there are “very good reasons” for differences in excise duties, and these concern the different cultural approaches among member states to harmful substances like alcohol and tobacco and the need to moderate consumption of energy products.

“We have been able to avoid significant market distortion without rate harmonisation thanks to the principle that duty is payable in the member state where the excise product is consumed regardless of the location of the seller,” Mr Casa said.

Enforcing this principle necessitated controls, he added, such as the automated system, which if properly utilised could weaken the arguments for greater harmonisation of excise rates.

The main concern being tackled by Mr Casa is that part of the process involving excise taxes is still done manually, leading to different information processes between member states.

“This can sometimes hamper the sharing of data on excise duties. A fully automated system, apart from facilitating the exchange of information, could also help national authorities tackle fraud by improving the way in which the movement of goods is tracked across the internal market,” Mr Casa said.

At a time when public finances in many member states are in a rut, any measure to improve the capacity of national authorities to collect a greater portion of duties due and in a more time-efficient manner will be more than welcome.

Mr Casa will have to ensure that the regulation reflects as far as possible the position of the European Parliament and, ultimately, to see that the reform receives the Parliament’s backing.

He will first have to win the support of Parliament’s Economic Affairs Committee and, then, most likely in March, the legislation will be voted on in plenary.

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