Nora Owen
Question:222 Mrs. Owen asked the Minister for Finance when the decision was taken to phase out duty-free sales; the steps, if any, he has taken to have this decision overturned; and if he will make a statement on the matter. [14868/97]
Written Answers - Duty-free Sales.
The decision to end duty free sales for intra-EU travel was taken by the ECOFIN Council, with broad agreement reached in December 1991. This was enacted into Community law in 1992 as part of the agreements governing the Single Market, which came into effect on 1 January 1993. The decision was, as required by EU law, made on the basis of unanimous agreement of the member states.
The initial proposals by the European Commission would have ended duty free sales in December 1992. The extension of the concession to 1999 was agreed in response to pressure from Ireland, among others, to allow time for the industry to adapt. Duty free or tax free sales for travellers to non-EU destinations are not affected.
As has been explained in this House before, the decision to end duty free facilities for intra-community travel can only be reversed by unanimous agreement at Council, following a proposal from the Commission. So far the Commission, which has always held the view that the principle of tax-free trading on intra-Community journeys is incompatible with the concept of an internal market without internal frontiers, have maintained that they are not prepared to put any fresh proposals to the Council for any extension beyond 30 June 1999, and have confirmed this position as recently as last week.
My predecessor raised the matter at the November 1996 ECOFIN while Ireland was in the Presidency. Ireland was not able to convince the Commission to carry out a study of the economic impact of ending duty free sales.
In order to inform any future discussions on this issue my Department has now engaged consultants to conduct an independent study into the direct consequences for Ireland of the ending of duty free sales for intra-EU travel.
After examination of the results of this study - which should be completed by the end of the year - I will be able to consider what further action, if any, can be taken in addition to lobbying the Commission.