France toys with 300% wine tax hike [updated 11.9.03]

France toys with 300% wine tax hike [updated 11.9.03] News Wine News
  • Wednesday 10 September 2003

The French government wants to raise tax on red wine by 300% in a move to lower the country's social security deficit.

Prime minister Jean-Pierre Raffarin is expected to make a decision by the end of the week. The current tax is rated at €0.03 (£0.02) and would rise to around €0.08 (£0.07) per bottle.

This does not come at a good time for French wine producers who have already seen a 25% drop in domestic consumption of their wines over the last ten years. This drop amounts to around 800,000 hectolitres of wine. Sales abroad have also been on a downturn.

Jean-François Délorme, president of the BIVB, the main Burgundy trade body, was quoted in UK newspaper the Times as saying 'It's a scandal…they are trying to assassinate wine at a time that consumption is already falling in France'.

Others are more circumspect, considering that wine is rarely touched by tax increases, the government was unlikely to carry through its plans. Jean-Louis Trocard, president of the Bordeaux trade body the CIVB, told French newspaper Le Monde, 'I don't think this increase will occur'.

Finance minister Alain Lambert said, 'I am an old parliamentarian who has rarely seen a tax increase on wine' in an interview on French television. Although wine is viewed as a national heritage in France, the opposition to the tax is mainly based on fiscal grounds. 'Our wines are already heavily, heavily taxed' said Nicholas Corne, spokesperson for the Mairie of Bordeaux. He added 'It's a question of money. At a time when French wines are not doing so well, an additional tax would not help sales.'

The problem falls between domestic and international concerns. France has breached and is expected to continue breaching EU rules and regulations concerning spending and the economy. M.Raffarin is currently feeling the pressure from his European counterparts, especially as Brussels requires all EU countries to keep their public spending under 3%. The proposed tax on wine would not cover the costs of the Social Security sector - accounting for €10 billion - but it would generate an expected €800 million.

  • [update] The French government has now abandoned the idea of increasing the wine tax. Vintners protested, as did Alain Juppe, mayor of Bordeaux, former prime minister and leading heavyweight in the governing party, the Union for a Popular Movement. Mr. Juppe voiced his opposition in a meeting with center-right Prime Minister Jean-Pierre Raffarin.

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