Brussels `won't change its mind on duty-free sales'

The European Commission yesterday launched an outspoken attack on efforts by the duty-free industry to reverse the looming ban on tax- free sales in 1999. As Chris Godsmark reports, the issue could provoke a damaging rift between the EC and some European governments.

Despite months of intense industry lobbying, Mario Monti, the European Commissioner responsible for taxation, made clear that the EC was not sympathetic to the campaign to continue with duty-free sales. The industry has claimed the abolition would mean the loss of many of the 140,000 jobs in the duty-free trade, worth more than pounds 4bn across the EU.

In a statement released during an industry conference in Brussels, Mr Monti said the decision to abolish duty-free sales, taken in 1992 by EU finance ministers, was not going to be changed even if lobbying budgets "increased to infinity".

"The time has come for airlines, airports and ferry operators, as well as suppliers of tobacco and alcohol products, to face up to reality and invest their money wisely to get ready for 1999," said Mr Monti.

"Seldom in the history of the EU has so much money and time been spent by such a wide coalition of interests on trying to reverse the decision."

The statement, the first by Mr Monti on the issue for several months, was attacked last night by BAA, the privatised group which owns Heathrow and Gatwick airports. Sir John Egan, BAA's chief executive, has repeatedly predicted that the Council of Ministers would overturn the ban, which would take effect from 1 July 1999.

Des Wilson, director of corporate and public affairs, accused Mr Monti of acting dictatorially. "The ultimate decision lies with the Council of Ministers, not the Commission. In saying this he's denying the Council's say on the matter. We'll continue to press our case."

Mr Wilson said Mr Monti was putting bureaucratic theory before the interests of consumers, who wanted duty-free sales to continue.

The Irish government backed the campaign yesterday, a move which will to put pressure on the UK government to clarify its position.

Labour has yet to make a public statement on its policy on duty-free sales. Countries such as Britain, Ireland and the Nordic countries stand to lose most out of the abolition.