A new Europe without duty-free

Inside the World of Travel; From midnight next Wednesday, duty-free sales within the EU will cease. There's confusion about how the new system will work, but here are some educated guesses.
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Indy Lifestyle Online
THAT FAMILIAR trolley will trundle up and down the aircraft aisle a little more quietly from Thursday next week. You and I must learn a new mantra, too. Instead of "A litre of gin and 200 Bensons", try "The Beach and Rainbow Six, please".

Forget candidates for air rage swigging illicitly from the gin bottle; Britannia Airways' Boeings will have all the serenity of a Notting Hill bookshop - which, in a sense, is what they will become. After the last duty-free trolleys are off-loaded on Wednesday evening, the mobile bookshelves will roll on board. The books will be tax-free, too - just as they are in Britain's bookshops.

After warning of the end of the travel world as we know it from 1 July, the airlines and ferry operators are making the best of a botched bureaucratic job to keep us spending in the stratosphere and shopping at sea.

Airports and airlines, ferry and tunnel operators will be seeking to offer the best deals that can be salvaged from the wreckage of the good ship Duty-Free. The final rules are still being hammered out with Customs and Excise, but this is how the world could look:

Will all duty-free privileges for travellers end?

No - only sales on planes and ferries within the European Union, and sales to travellers at air and sea ports whose journeys are within the EU. But you'll still be able to drink at duty-free prices while aboard.

What will happen to on-board duty-free shops on Channel ferries after 1 July?

That depends who you talk to. "It'll be fairly chaotic in July and August," says Bill Gibbons of the Passenger Shipping Association. "We don't know when we can open our shops, when we can close them, or what the accounting regime will be." But Customs & Excise say that life will be simpler for the public. With duty-paid goods, you can bring back as much as you like.

So what are the ferry companies unhappy about?

The problem is that the tax regime will change halfway across the Channel. The ferry companies will sell duty-paid goods at the tax rates prevailing in France or Belgium, because those are lower than in Britain - in the case of beer, 4p a pint in France compared with 30p in the UK.

If the tax rates change halfway across, does that mean the prices will, too?

Customs and Excise think they won't, because it would be chaotic, but instead it expects the ferry operators will come up with systems that will allow us to buy at the most advantageous tax rates. The key is the point at which the sale is "clinched". Out from Dover, you can select the goods but only pay for them beyond the halfway mark; coming back, so long as you've paid during the first half of the voyage, you can pick up the goods at your leisure.

Really as much as I like?

Customs says that if you buy 10 litres of spirits and 800 cigarettes on board the ferry, you'd better have a good story.

Given that airport duty-free shops will continue to sell to people who are flying outside the EU, how are they going to sort out who's entitled to cheap drink and tobacco?

About seven million of us will be taking holiday charter flights within the EU this summer, and Customs says it'll be down to the airport duty- free operators to make sure the rules are enforced. They'll do this by checking your boarding pass. The fun will start at places such as Luton, where with a ticketless airline like easyJet, you don't get a proper boarding card. So it could be tricky for the duty-free shop to know if you're going to catch the flight to Geneva, which is outside the EU and for which your old duty-free limit still applies, or the plane alongside which is going to Athens, in which case you're not eligible.

What about when someone's flying out to Spain today and buys their full duty-free allowance on the way out - will it become illegal to bring it back in from 1 July?

No, as it will have been legally landed in Spain, it will thereafter be treated as duty paid.

There are a number of flights and ferries going out overnight on Wednesday. What will happen with duty-free sales there?

It's one of the many uncertainties that surround the whole business. But Customs says that for the first few months it'll adopt a "light touch" approach, and will probably give travellers the benefit of what are bound to be a lot of doubts.

We've done planes and boats - what about trains?

About the only uncomplicated thing about these changes is that for Eurostar trains between London, Paris and Brussels, nothing will change; they don't sell duty-frees, and that'll continue to be the case. Eurotunnel's duty- free shops at either end of the Channel Tunnel will switch to duty-paid.

The duty-free lobby says that 140,000 jobs will be lost throughout Europe. Is this likely?

This estimate assumed all the present duty-free sales would vanish in a puff of duty-free smoke. Try telling that to the smoker or drinker, or indeed to the boss of Merchant Retail, who says that "three out of four sales in travel-related outlets will come back to the high street". And Amsterdam airport - a favourite for denizens of duty-free - has said that not one worker at Schiphol will lose their job because of the move.

Shouldn't air fares fall, because the airlines will not need to waste fuel flying huge quantities of booze and fags round Europe?

It would be nice to think so, but this is unlikely to happen. Indeed, airlines (and ferry operators) say that they will probably raise their sales of booze and cigarettes in order to make the same profits.

Farewell to the Butter Fahrt

IN THE end, Denmark sank duty-free: 14 out of the EU's 15 finance ministers wanted to defer the abolition of duty-free sales, but the government in Copenhagen did not. Since a postponement would require unanimity, the original 1991 decision stood.

Were you managing Denmark's finances, you'd probably want to call a halt to the duty-free party, too. The reason is the amount of butter oozing into the country, and the consequent tax revenues slipping away.

If you board a Denmark-bound ferry this weekend, you would likely find the frenzy in the dairy products shop to be very messy. This is the last weekend before duty-free butter melts away, and sales of salami slump.

In Germany they call it Butter Fahrt. I was intrigued by a mention in a shipping guide that gave the fare of DM0.00 for a trip from the port of Travemunde to Rodbyhavn in Denmark. A misprint? No: when I turned up at the booking office, I was given a ticket showing a price of DM0.00.

Once on board, everyone headed straight for duty-free. Thousands of Danes and Germans ride these "butter boats'' back and forth across the Baltic just to buy tax-free food and drink. Some retired people even go contract-shopping, buying luxuries such as vodka and wurst to order.

The ferry operator makes enough profit on selling provisions to be able to dispense with fares. Needing neither butter nor beer, just a ride to Denmark, I had a cup of tea and enjoyed watching a three-hour shopping frenzy around the Lurpak counter.

Simon Calder

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