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Beer and wine dampen car tax harmony plans

Moves by European taxation commissioner Frits Bolkestein to harmonise car prices across Europe by scrapping registration taxes in favour of road and fuel taxes have been thrown into doubt after a similar scheme to align beer and wine duties was shelved.

Officials within the European Commission's single market directorate had started work on the plans, which would have increased prices in countries like Germany and Spain but reduced them in the UK, but a majority of commissioners indicated their opposition, according to press reports.

Officials are quoted as saying the idea would do “more harm than good” by putting up prices in countries where wine is produced. Bolkestein never officially approved the plans, but he is determined to deal with what he calls “tax obstacles” affecting price commonality throughout the EU.

He is already looking to tackle car registration prices, which he believes are responsible for 20 per cent of the differentials in car price across the EU. Bolkestein wants to see registration taxes phased out over a five- or 10-year transitional period and replaced by higher annual road and fuel taxes.

However, the same arguments for beer and wine can be applied to cars, where lower priced countries like Italy and France possess several influential carmakers. Meanwhile Finland says it will agree with a European court decision ordering it to scrap discriminatory taxes on imported used cars, a further indication of the EC's desire to form a single car market.

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