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Session 2006 - 07
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Public Bill Committee Debates

Customs and Excise Duties (Travellers’ Allowances and Personal Reliefs) (New Member States) (Amendment) Order 2006

The Committee consisted of the following Members:

Chairman: Mr. Greg Pope
Brennan, Kevin (Lord Commissioner of Her Majesty's Treasury)
Buck, Ms Karen (Regent's Park and Kensington, North) (Lab)
Cable, Dr. Vincent (Twickenham) (LD)
Clarke, Mr. Charles (Norwich, South) (Lab)
Davies, Philip (Shipley) (Con)
Drew, Mr. David (Stroud) (Lab/Co-op)
Evans, Mr. Nigel (Ribble Valley) (Con)
Evennett, Mr. David (Bexleyheath and Crayford) (Con)
Goldsworthy, Julia (Falmouth and Camborne) (LD)
Goodman, Mr. Paul (Wycombe) (Con)
Healey, John (Financial Secretary to the Treasury)
Johnson, Ms Diana R. (Kingston upon Hull, North) (Lab)
Khan, Mr. Sadiq (Tooting) (Lab)
Michael, Alun (Cardiff, South and Penarth) (Lab/Co-op)
Newmark, Mr. Brooks (Braintree) (Con)
Tami, Mark (Alyn and Deeside) (Lab)
Whitehead, Dr. Alan (Southampton, Test) (Lab)
Susan Griffiths, Committee Clerk
† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 12 December 2006

[Mr. Greg Pope in the Chair]

Customs and Excise Duties (Travellers’ Allowances and Personal Reliefs) (New Member States) (Amendment) Order 2006

10.30 am
The Financial Secretary to the Treasury (John Healey): I beg to move,
That the Committee has considered the Customs and Excise Duties (Travellers’ Allowances and Personal Reliefs) (New Member States) (Amendment) Order 2006 (S.I. 2006, No. 3157).
I welcome you to the Chair, Mr. Pope. I think that this is the first time I have served under your chairmanship, and I very much look forward to it. I also welcome hon. Members to the Committee.
The order was laid on 29 November alongside a written statement that I made to the House. Its provisions relate to the two new member states of the European Union—Bulgaria and Romania—which, from 1 January next year, will take advantage of a derogation that allows them to delay meeting the EU minimum duty levels on cigarettes. In introducing the order, the Government are using a provision agreed by member states in 2005 which allows existing member states to maintain quantitative restrictions on the import of cigarettes by those travelling from new member states that have not met the EU minimum levels of duty.
The order provides a relief from excise duty on the restricted amounts of cigarettes acquired in Bulgaria and Romania during the transitional periods, which are the periods when their derogations from the minimum duty levels apply. The same restrictions on the import of cigarettes for personal use from those countries will apply as if from third countries—in other words, 200 cigarettes. No such restrictions are required for other tobacco products or for alcohol, because both Bulgaria and Romania are already meeting the EU minimum rates in relation to those products.
No members of this Committee served on the Committee that considered the order two years ago, but hon. Members may be aware that the Government introduced similar measures applicable to certain tobacco products imported from eight of the then 10 new accession states during the last round of EU enlargement in 2004. At that time and now, we considered carefully whether to maintain the restrictions. We did so because we strongly recognise and support the rights of citizens to shop across the borders within the EU and to bring back as much tobacco or alcohol as they wish for their own use. However, the principle of trade in the single market is based on the premise that all members abide by common rules, one of which is setting minimum duty rates that all members agree to apply. Once the transitional periods end, people travelling from Bulgaria and Romania will enjoy the same benefits as those from other countries. Incidentally, in travelling to the UK, they will enjoy the highest indicative guideline levels in the Union.
EU minimum rates of duty on tobacco are an important element in pursuing the wider health objective of reducing consumption. Research has consistently shown that the price of cigarettes affects demand and that smoking is the single greatest cause of preventable illness and premature death in the UK, probably killing around 100,000 people every year, with the effects of tobacco not just restricted to smokers.
In addition, the arguments for applying restrictions remain strong. They are the same as the ones that we debated in Committee and for which we sought approval last time we considered the order. The restrictions provide a certainty for both officers and travellers. They also reduce the cost of countering smuggling by minimising the time taken to deal with travellers who bring back excess tobacco products from those countries. Imposing restrictions in respect of Bulgaria and Romania will maintain a consistency of approach with the eight countries currently subject to restrictions until they, too, reach the minimum levels of duty.
10.35 am
Mr. Paul Goodman (Wycombe) (Con): It is a pleasure to see you in the Chair, Mr. Pope. I have not served under your chairmanship before either, and I am grateful to have the opportunity to do so.
Perhaps the best way to consider the statutory instrument is to think about what would happen if it were not introduced before 1 January by the Financial Secretary or another Minister. Without it, the current arrangements in relation to restrictions on Bulgaria and Romania would lapse. As both countries have a derogation, substantial amounts of tobacco—probably larger amounts than required for personal use—could be brought in from those countries. The measure is, basically, a tidying up SI. As the Financial Secretary said, it takes him back to 2004, when he introduced more or less exactly the same SI in relation to the EU countries that joined then.
I have one question, which goes back to what the Financial Secretary said in 2004. When he introduced the equivalent SI then, he referred to arrangements in other countries. He said:
“Members of the Committee may be interested to know that five other member states—Belgium, Denmark, Finland, Germany and Sweden—have said that they intend to take up the option of applying the restrictions that we are considering. Austria has indicated that it is likely to maintain the quantitative restrictions that already apply. In addition, France and Ireland are still considering their position.”—[Official Report, Eighth Standing Committee on Delegated Legislation, 29 April 2004; c. 5.]
What is the situation this time?
10.36 am
Julia Goldsworthy (Falmouth and Camborne) (LD): As this is a tidying up exercise, I do not intend to detain the Committee. Can the Financial Secretary shed any light on when he expects Romania and Bulgaria to set minimum duty rates on the products? I am also interested to know how his Department plans to raise awareness of the restrictions and what the procedures will be at the point of entry. If EU and non-EU entrants to the country are separated, how will it ensure that people understand the differences, and how does it plan to enforce them?
10.37 am
John Healey: The answer to the hon. Member for Wycombe is that in addition to the list that I reported to the Committee and he read out, Austria and Ireland also introduced quantitative restrictions. Eight countries, including the UK, decided to do that with the accession countries last time around. There is no reason to think that many of those countries will not adopt a similar approach to Romania and Bulgaria, both for consistency’s sake and for policy considerations, which we have considered today.
The transitional arrangements end on 31 December 2009. I would expect Bulgaria and Romania’s derogation from the requirement to introduce minimum levels of tobacco duty—in this case on cigarettes—to last for that time, at least until the point at which they raise their cigarette duties to the minimum levels required.
Travellers coming back from Bulgaria or Romania in the interim period will in practice receive the same advice and information that we have outlined and expect for travellers from the other accession 8 countries. In other words, we will ensure that clear information about the quantitative restrictions—in this case, a limit of 200 cigarettes—is maintained on posters, the Customs website and the advice line. For anyone arriving in the UK with more than 200 cigarettes, their obligation is not to go through the blue channel but either to take the red channel, if that exists at a port, or to pick up the red phone and report the excess.
I hope on that basis that members of the Committee feel able to endorse the measure.
Question put and agreed to.
Committee rose at twenty minutes to Eleven o’clock.

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