EU Commissioner finds tax situation unacceptable


taxescartoon.jpgNow the European Union is concerned about the wine taxation across India. The European commissioner for agriculture and rural development, Mariann Fischer Boel, said the state variations in taxes was unacceptable to them when talking to the press in Delhi.

This is not the first time that the EU has complained and it certainly won’t be the last. With Indian agricultural exports to the European Union far exceeding imports by a factor of roughly ten to one, the European Union is feeling the pinch. Speaking to reporters at a breakfast meeting in the capital, Boel said, “We want to secure access to Asian, especially the Indian, market for our refined products.”
It was just over a year ago that the European Union formally complained to the World Trade Organization over taxes and restrictions on European wine and spirits imposed by three Indian states namely Goa, Maharashtra and Tamil Nadu. A year later and post the Doha WTO talks the bad blood still remains.
On the surface of the debate, it is hard not to understand and agree with the EU point of view especially as the current tax regime hurts the Indian consumers as much as it hurts the EU wine producers. Still, with some Indian producers like Indage Vintners in considerable trouble, there’s feasibly intense local pressure on the Indian government to uphold the current taxation policy. Part of the problem is that in India there are two levels of taxes, custom duties on wines imported into the country and then state level taxes which differ by the price point and origin of the wine.
In comparison to India’s 162.6% total customs duties on wine, Brazil imposes a flat 25% and China only 17% with maximum additional duties no greater than 53% for Brazil and 17% for China. To understand the tax issue, read Alok Chandra‘s informative column titled, “The vexatious question of tax” in the latest issue of Sommelier India. Subscribe today.

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