In a reasoned opinion sent to Athens on Thursday, the European Commission demanded that the Greek government abolish tax exemptions on locally made alcoholic beverages.
The decision is set to inflict a heavy blow on producers of bottled raki and tsipouro, firstly because the special consumption tax on the drinks will be increased to that of other alcoholic beverages, and secondly because it is almost certain that the trafficking in illegal tsipouro and raki will grow further.
The government will have to respond to Brussels within a couple of months, and if that response is not deemed satisfactory, the Commission could take Athens to the European Court of Justice.
The issue of the bulk, unbottled quantities of raki and tsipouro is also included in the second toolkit of the Organization of Economic Cooperation and Development (OECD) that Greece has committed to use in the context of its bailout agreement with its creditors. The OECD had asked either for a ban on bulk sales of raki and tsipouro or for them to be allowed only with legal documents.
As things currently stand, standardized raki and tsipouro carry a special consumption tax of 12.75 euros per liter of ethyl alcohol, which is 50 percent lower than that imposed on other drinks (25.50 euros/liter of alcohol). Bulk raki and tsipouro officially have an even lower tax, at just 1.4 euros/liter. Beer has a 6.50 euros/liter rate, while wine has no such tax.
The Commission stressed that European Union rules dictate that all ethyl alcohol products should have the same consumption tax rate and that the only exceptions should be those provided by EU legislation. Consequently, according to the Commission, the application of a reduced consumption tax rate on bottled and bulk tsipouro and raki constitutes a violation of EU rules both in terms of the consumption tax and the free trafficking of goods, as this is seen as favoring local produce over imports.