Romania torpedoes EU deal on alcohol excise duties over moonshine

Gunther Oettinger, European Commissioner for Budget and Human Resources and Eugen-Orlando Teodorovici, Romanian Minister for Public Finance, during the Econfin press conference. [European Union]

Member states clashed on the reform of alcohol excise duties during a meeting of EU financial ministers last Friday (17 May), as the Romanian Presidency of the EU tried to raise the maximum limit on home distillation, in pursuit of its own national interest.

“It is obvious that member states are not willing to do any effort or progress on the issue of fruit beverages for own consumption. You can imagine my disappointment that we didn’t find understanding,” Romanian finance minister Eugen Teodorovici told the press after the Ecofin meeting last Friday.

The 28 finance ministers failed to reach an agreement on the alcohol excise duties directive, as most EU countries were unable to accept the Romanian Presidency’s proposal, in particular the part related to moonshine, which aims to regulate local alcohol production.

“If we are isolated, we will stay isolated until a solution is adopted,” Teodorovici insisted, effectively wielding a veto on the proposal.

Diplomatic sources shared their astonishment towards the position of the Romanian EU Presidency during the negotiation, as member states were very close to reaching an agreement.

Romania currently holds the presidency of the EU Council of Ministers. As such, it is expected to act as an honest broker, putting aside its national interests to seek consensus among the 28 EU member states. Its solo run during Friday’s debate on alcohol duties was condemned by several member states, according to diplomatic sources.

Questioned on the matter, Teodorovici replied that apart from holding the rotating presidency of the Ecofin Council, he was first and foremost finance minister of his own country, Romania.

“This is my way, my style,” he stressed.

Lower taxes for moonshine

According to the text on the table, member states may exempt from excise duty, or apply reduced rates, for ethyl alcohol distilled from fruit by private individuals, for their private use.

The exemption would only be applicable to no more than 50 litres of spirits per year. However, Romania insisted on raising the amount to 100 litres for itself and Hungary.

“We are very concerned about the introduction of an exemption or a reduced rate for home distillation because of the health risk involved,” the EU’s economic Commissioner Pierre Moscovici said after the discussion.

His statement was echoed by several capitals. Although some supported the exemption, they demanded to set a clear limit at a reasonable level applicable to all member states.

“In our view, these exemptions should only apply to a limited annual amount of ethyl alcohol per household and this level should be as low as possible,” the Commissioner stressed.

The discussion took place in the context of the reform of the directive on the structures of excise duty on alcohol as well as general arrangements for excise duty.

The aim of the reform is to reduce costs for small producers of alcoholic beverages, clarify rules on excise duties and establishing and EU wide certification scheme concerning small producers.

After talks collapsed on Friday, the Ecofin is now expected to continue technical discussions to try to reach a compromise.

“From our side, the things are very clear. We are waiting until June, as the President, for a solution from the member states; from July, as a minister of finance,” Teodorovici warned.

[Edited by Frédéric Simon]

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