No reprieve for duty-free shops

EUROPEAN finance ministers squashed hopes yesterday of a reprieve for duty-free shopping. A final attempt by the Irish government to force a rethink failed at talks in Brussels despite strong support from the French and German governments and a change of heart at the last minute by Gordon Brown, the Chancellor.

Such was the determination by a majority to forge ahead with abolishing the tax perk by July 1999 that only a minority of countries was prepared to back even an impact study into the consequences for jobs. Campaigners had pinned hopes on a study as it would have implied a reprieve.

Mr Brown, who has consistently appeared hostile to any revision of the 1991 decision to scrap duty free, staged a surprising turnaround by backing calls for a study as he arrived for the meeting. "This is a very important issue which affects consumers right across Europe and affects consumers in Britain as they travel abroad" he said.

He blamed the Conservatives for signing Britain up to abolition, and said he would have preferred a full inquiry into the employment implications. "I do not like the decision we have made today", he said.

Campaigners for duty free expressed dismay at the outcome but pledged to fight on. They claim that 23 000 job losses in the UK and 130,000 throughout Europe could flow directly from the decision. John Hume of the International Duty Free Confederation said: "We are going to reinforce our efforts now. As the day draws closer ministers will realise that this is economic suicide". Barry Goddard of the British Duty Free Confederation predicted that 17,000 jobs in the UK alone could be lost as a result of the decision.

Irish minister Charlie McCreevy acknowledged the defeat but took heart from the strong support shown by the Germans and French and said lobbyists should not give up the fight. "It's never over till it's over" he said. Mr Mc Creevy said scrapping duty free had been agreed in 1991 in the expectation that duties on alcohol and tobacco would be harmonised, but this had not happened.

But Mario Monti, the European commissioner for the single market, said duty-free shops were a hidden subsidy for the consumption of alcohol and cigarettes. "What we have done today is to confirm a decision taken seven years ago. I have nothing against cigarettes and alcohol, but should we be asked to subsidise them?" Mr Monti said.

He agreed that the Commission would produce a report on the ways in which governments could attenuate any adverse consequences which might arise from the decision. This could be in the form of regional funding or state aid, he said.

Leading article, page 20