Explanatory Memorandum to COM(2001)466 - Computerising the movement and surveillance of excisable products - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2001)466 - Computerising the movement and surveillance of excisable products. |
|---|---|
| source | COM(2001)466  |
| date | 19-11-2001 |
1.1 Council Directive 92/12/EEC of 25 February 1992, on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products i, provides that products moving between Member States under excise-duty suspension arrangements must be accompanied by a document completed by the consignor whilst Commission Regulation (EEC) No 2719/92 of 11 September 1992, on the accompanying administrative document for the movement under duty-suspension arrangements of products subject to excise duty i, lays down the form and content of the accompanying document.
1.2 In view of the amount of fraud connected with intra-Community movements of excisable alcohol and tobacco products, the Directors-General for Customs and Indirect Taxation set up a high-level group on fraud in these sectors on 26 March 1997. The group's remit was to identify the problems and propose solutions.
1.3 The group delivered its report in April 1998 and the Directors-General accepted it at their meeting of 24 April. Its conclusions include a recommendation for 'the Commission and the Member States to develop and introduce a computerised intra-Community movement system' (point 3.4.4).
1.4 The Commission then sent a communication to the Council on the measures needed to combat fraud in connection with excise duty (O/98/131). This included the information that the Commission had commissioned 'a feasibility study for improving the control of the movement of goods by the use of Information Technology ... financed within the framework of the Fiscalis Programme'.
1.5 The ECOFIN Council of 19 May 1998 approved the report and underlined the importance of a computerised control system as a long-term goal, subject to the outcome of the feasibility study.
1.6 The report was sent to Parliament on 21 September that year.
Contents
- 2. Revenue from excise duty as a proportion of total Member State revenue
- 3. Feasibility study on computerising the excise system
- 4. Respective obligations of the Commission, the Member States and traders
- 4.1 The Commission
- 4.2 The Member States
- 4.4 The Community's and the Member States' respective areas of responsibility
- 4.5 Traders
- 4.6 Bases of comparison
- 5. The will to implement
2.1 The figures currently available from Eurostat are for 1996. According to these, the total revenue from excise duty of all the Member States taken together is EUR 234 thousand million, or 8.1% of their combined total tax revenue of EUR 2 881 million.
2.2 For the same year, the loss to fraud in connection with excise duty on tobacco and alcohol (i.e. excluding mineral oils) in all Member States taken together was estimated at EUR 4 800 million, the figure quoted in the high-level group's report. It is calculated from estimates made by the Member States themselves.
3.1 As a result of a tender published on 11 August 1998 in the S series of the Official Journal (XXI/98/CB-5003), followed by the usual selection procedure, a fourteen-month contract for carrying out a feasibility study was awarded to Alcatel TITN Answare and signed on 29 December.
3.2 The Commission approved the final report on the study on 17 March 2000. This shows that it would be technically possible to computerise the movement and surveillance of all products subject to excise duty. In other words, it would be entirely possible to take the accompanying administrative document - the piece of paper that currently accompanies all such products when they are moved between Member States under suspension arrangements - and replace it with a computer messaging system linking traders with each other and also routing their messages through their respective national administrations. Such a system would provide the Member States with real-time information on current movements and allow them to carry out whatever pre-movement, wayside and/or post-clearance checks they deem necessary. The traders consulted have also shown great interest in such a system since, on the whole, they accept that doing away with paper - as this system would - would simplify formalities, make trading more secure and release guarantees more quickly. This is because a consignor would immediately receive notification from the consignee of the arrival of the goods and this would have the same effect as the current copy 3 of the accompanying administrative document whose return triggers the release of the consignor's guarantee and discharges him of all further responsibility. Technical details of how such a system could be developed are given in the Annex to this proposal.
3.3 However, the study also shows how complicated it would be to establish such a system since it would have to connect up 80 000 traders to 15 national administrations - themselves linked up with each other - and would have to be available 24 hours a day, 365 days a year. Also, recovery times in the event of breakdown or maintenance would have to be very short. And, whilst some functions could be shared with the computerised transit system (NCTS/NSTI i; e.g. the list of competent offices in the Member States), the content of the messages themselves would differ from that of the NCTS since that links customs offices only i.
3.4 What is more, the applicants for European Union membership would have to participate fully in all the steps involved in setting up the system since they would have to be connected up to it from the date of accession, by when the system would be in operation. This means they would also have to bear the costs and accept the constraints - factors which would make the system all the more complex and difficult to manage.
3.5 The study shows further that the setting-up phase, i.e. the period beginning on the date when work on developing the system actually starts, would be five years. This is relatively long but is impossible to reduce because of all the tasks that have to be completed before the procedures for tracking movements of excisable products can be computerised (e.g. management of code lists, excise offices, thesaurus of terms, harmonisation of excise registration numbers).
3.6 Finally, the study also shows that the costs of development and deployment, and the annual financial and administrative running costs would be high, for both the national administrations and the Commission (see point 4 below).
Where financing the system is concerned, the original idea was to apply Article 4 i of the Fiscalis programme decision (Decision No 888/98/EC of the European Parliament and of the Council of 30 March 1998 i) by which the Commission would finance those components of the projected system which would be the Community's responsibility, including the excise movement verification system (see Article 1 i of the Commission implementing Decision No 98/532/EC of 8 July 1998 i). It should be remembered that the total budget allocated to Fiscalis - for the entire period and all tasks - is EUR 40 million.
By comparison, the budget which it is estimated that the Commission will have to fund - for accompanying measures, for both development and deployment of the electronic excise system and for the whole period from 2002 to 2006 - is estimated at EUR 35 million.
In other words, given the other tasks that also have to be completed as part of the programme, the Fiscalis budget is insufficient to finance the Community's share of the system. A specific budget allocation would therefore be needed to cover computerisation of the movement and surveillance system for excisable goods (see Article 10 of this proposal).
Also, once the system has been set up and is operational, managing it would require an annual operating allocation of EUR 4 million.
Where monitoring and managing the system is concerned, a committee would have to be set up to monitor the computerisation process and use of the budget. Following the Commission decision of 8 May 2001, six posts for seconded national experts have been allocated to the setting up stage of the project. However, DG TAXUD would remind all concerned that the estimate was for nine permanent staff posts.
Only the project financing aspects need be considered here. Some of the Member States have calculated that, depending on the progress it has already made and the number of traders involved, each Member State would have to find EUR 5 to 12 million to cover all phases of setting up the system and some EUR 300 000 per year to cover running costs.
It was not possible to include in the feasibility study a calculation of the costs to be borne by each Member State since the infrastructure of one State's administration differs appreciably from that of the next, particularly that for training, information, support and development. Each Member State would therefore be required to estimate its own costs on the basis of the technical data provided in the feasibility study. In particular the Member States, too, would have to determine whether they have sufficient staff to implement the project or whether they have to outsource. This is a key factor in the end cost. Similarly, they would need to calculate their annual running costs on the basis of the parameters given in the feasibility study. The tasks to be completed by the Member States are as set out in Decision 98/532/EC (see Article 5 of this proposal).
4.3 It should be pointed out that, for both the Commission and the Member States, management, coordination, training, information and technical support would absorb just under 50% of all investment.
In this connection, some of the details of the split between the Community and non-Community components of the system as set out in Decision No 888/98/EEC should be reviewed (see Article 3 of the proposals). The Community's funding obligations - and particularly the Commission's - remain essentially unchanged from Decision 98/532/EC (see Article 4 of this proposal).
The cost to each trader connected up to the system (and all traders would have to be connected up) is estimated at a maximum EUR 140 000 per business for development and EUR 15 000 per business and year for running costs. This estimate is solely for big companies which decide to develop their own complete application comprising an interface with the projected Community computerised excise system and would therefore have to equip themselves with the necessary software. Typically such businesses would be cigarette manufacturers and oil companies. By contrast, the cost to a small trader such as an independent wine maker would be lower as the only equipment needed would be a computer and a modem. This is because each Member State would be required to develop a standard application and make it available free of charge to any trader requesting it.
Revenue: The figures obtained from certain Member States were compared with the amount of national revenue each obtained from excise duty in 1997. This showed that the investment each Member State would be required to make represents no more than 0.02 to 0.2% of that revenue.
Fraud: However, given the amount of fraud currently perpetrated, the investment and running costs of all parties would pay off in short order because, thanks to the on-line checks the projected system would enable national administrations to make, it would be possible to protect traders from such fraud. Assuming an initial investment of no more than 0.2% of total annual national revenue from excise duty, the total burden to be borne by the Commission and Member State budgets would be equivalent to only 5% of the total amount of revenue lost annually to evaded excise duty.
Computerisation of the excise system is also supported and advocated by all national administrations and traders because it would simplify documentation and mean faster discharge of operations. This chimes with a general trend in all procedures to eliminate paper documents and use automated data transmission methods.
Since the ECOFIN Council decision of 19 May 1998 it has emerged that there is the political will to develop a computerised excise system. Nevertheless, as this would be a huge, highly complex and costly project, the Member States and the Commission would each have to give a binding undertaking with regard to their legal and budgeting obligations (see Article 2 of this proposal), which is why this proposal for a European Parliament and Council Decision has been put forward.