TAE at the WHO meeting in Moscow: Do not undermine tax competition and keep the tax burden low!

We view with concern the efforts of the European Union (EU) and the World Health Organisation (WHO) to introduce standardised excise duties on products such as sugary drinks, tobacco and alcohol. This would set a dangerous precedent, and such excise duties could easily be extended to all other consumer goods, according to Rolf von Hohenhau, President of the Taxpayers’ Association

(TAE). The TAE advocates for individual tax autonomy and opposes any regional or international tax changes that involve the harmonisation of tax rates or the introduction of new taxes.

The WHO will once again discuss an increase in excise duties and recommend uniform excise duty rates in Moscow, Russia, from 13 to 18 October 2014.

For these reasons, the TAE is one of the initiators of an international coalition letter supported by 22 taxpayers’ groups from 15 different countries. The coalition letter, published today, 10 October 2014, aims to promote tax competition and to criticise the financial transaction tax and excise duties.

Link to the international coalition’s
letter
. With regard to tobacco, the draft guidelines for the meeting state that tobacco tax should account for at least 70 per cent of the retail price. It is unclear whether the target figure of 70 per cent includes both tobacco duty and value-added tax. From the perspective of the tobacco tax organisation TAE, there is no universally optimal level for tobacco taxes and therefore no universally applicable tobacco tax. The introduction of a uniform tobacco tax rate of 70 per cent could lead to significant price increases for cigarettes in many countries, which would tempt consumers to buy illegal tobacco products. We therefore call on the EU Member States to amend their position to include a corresponding clarification or to remove the 70 per cent rule entirely.

Rolf von Hohenhau: “These international threats to tax sovereignty are on the rise. Attempts to establish international tax systems would expand the sphere of influence of the EU and the WHO and jeopardise the tax sovereignty of Member States, which has always been a core competence of national parliaments.”
Furthermore, any price increase resulting from a harmonised tax system would disproportionately affect people on low incomes, as the cost of consumer goods would rise.

Munich, 10 October 2014