EU Commission Set to Reject Call to Extend Duty-Free Sales

[Robert Weissman <rob@essential.org>]

EU Commission Set to Reject Call to Extend Duty-Free Sales
by Bloomberg News (1574) 
Date: Thursday, 2/11/99

Brussels, Feb. 11 (Bloomberg) -- The European Commission is set to reject
calls for an extension of duty-free sales in the European Union following
a study into whether such a repeal would lead to large job losses. 

The commission, the EU's executive agency, agreed at December's Vienna
summit of EU leaders to assess potential damage to the tourism industry
and to consider delaying the ban on duty-free sales, which is due to come
into force July 1. 

The commission's study, a copy of which was obtained by Bloomberg News,
concludes that the impact on jobs will be "of a specific and local
nature'' and that therefore it doesn't justify a change in the timetable
for enforcing the ban. The report also said it doesn't agree with all the
data provided by backers of duty-free sales. 

"The figures on employment put forward by the duty-free industry can be
challenged and they are not supported by elements provided directly to the
commission by national administrations of (EU) member states,'' the report
said. 

The commission will discuss the report next Wednesday before reporting
back to EU ministers. Betty Olivi, spokeswoman for EU Single Market
Commissioner Mario Monti, wouldn't say whether the 20 commissioners are
likely to endorse the conclusions of the report and wouldn't discuss its
content. 

Powerful Lobby While duty-free sales were worth $6.9 billion in 1995,
barely a ripple in the EU's $7.8 trillion economy, their approaching end
has sparked lobbying by an industry with influence in countries such as
the U.K., Ireland and Sweden. 

Travelers can generally avoid value-added taxes, which can approach 20
percent on cigarettes, liquor and other luxury goods, by simply stopping
in an airport or ferry duty-free store en route to another European
country. 

The industry is calling for a five-year extension. 

Denmark, the Netherlands and Belgium are calling for an end to duty-free
sales, which they say is an unfair subsidy to airlines and ferry companies
and caters to an upper-income clientele that can afford to travel. 

Opponents of the ban say ending duty-free shopping could eliminate 50,000
jobs and force up airline ticket prices by 30 percent, since airlines
often share in the revenue from sales.