Chancellor supports reprieve on duty free

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The Independent Online
THE CHANCELLOR, Gordon Brown, who put what was thought to be the final nail in the coffin for duty free last April, performed a U- turn before his ministerial colleagues yesterday by announcing in Brussels that he backed the postponement of plans to abolish duty- free shopping.

Britain's sudden support for a five-year delay, an idea now being canvassed by the German Chancellor, Gerhard Schroder, with strong support from the French government, was revealed in yesterday's Independent. But it came as shock news to campaigners for duty free, led by the airlines and ferry companies. "Gordon Brown is now saying he would support a delay. This is a major shift from May last and it gives us great hope," said John Hume, of the International Duty Free Confederation.

Mr Brown revealed yesterday he had, in fact, supported a delay in the abolition of duty free "all along". He took care to stress he did not want to raise false expectations, but insisted Britain had always indicated its support for deferring the date of abolition beyond June 1999. A sympathetic gesture for the thousands of ferry and airport workers who fear their jobs are at risk? Or a shrewd political manoeuvre aimed at making friends in Bonn and Paris?

Some commentators have linked Mr Brown's eleventh- hour bid to save booze cruises to Calais and defend the right of package holidaymakers to stock up on cheap cigarettes, to the storm over EU tax harmonisation. The diversionary move may have been directed at gaining tabloid support at a time when Sun and Express readers have been bombarded with scare stories about alleged EU tax-raising threats.

To overturn the 1991 decision to abolish duty-free sales in June 1999 would take a unanimous decision of the 15 finance ministers - and the chances of this happening seem remote. Throwing its weight behind a popular issue, particularly one which will never happen, is a win-win move for the Government or even a cheap trick.

But it could happen. The balance has swung with the rise to power of Gerhard Schroder. He made duty-free retention an election issue. With Germany and France, and now Britain, on board for a delay of at least a few years, the chances of a qualified majority of finance ministers in favour of a reprieve have soared.

Of course, if Britain would agree to abandon the national veto on taxation matters, then there would not be a problem in saving duty free. The ultimate popular move would be for the Chancellor to slash excise rates on wine, beer and cigarettes to continental rates.