The EU approved today by a large majority (579 votes for, 13 votes against and 12 abstentions) a proposal to extend an exception awarded in 2002 authoring Portugal to reduce the consumption tax on liqueur and spirits produced and consumed in the Azores up to 75 percent of the national rate.
This decision of the EU Parliament is the result of the technical work developed by the Government of the Azores among Community institutions, mainly the European Commission and the European Council, following the initiative to maintain the exceptional scheme on regional liqueur and spirits.
The application of a reduced excise duty rate on liqueur and spirits produced and consumed in the Azores is fundamental for the survival of this traditional sector, where forty seven operators are registered, employing nearly ninety workers.
The continuity of a more favourable tax system will allow the economic operators of this activity sector to maintain the competitive price of the products comprised by this measure in the regional market towards a very aggressive competition by products from abroad as well as to preserve the jobs involved.
The spirits industry is facing a set of constraints which, combined with the essentially familiar nature of these industrial units where the produced quantities are very small, which strongly conditions the competitiveness of the products in the market.
The possibility of achieving an economy of scale and of agglomeration as it happens in mainland regions is precluded to this sector and the efficiency threshold is not usually reached in the use of infrastructures and equipments.  With regard to equipments, higher investments are necessary than those made in the remaining contiguous spaces due to their acquisition abroad, the increased transportation and installation costs and the underuse of the installed capacity towards the limitations of the local market. The absence of a glass and a packaging industry in the Azores also requires that the glass and packaging supplies have to be carried out outside the region under disadvantageous conditions for the Azorean business sector, given the transportation costs and the tied-up capital to build up a large stock of such products.
Taking into account these constraints, the reduction of the tax burden has mitigated, as the Government of the Azores had defended, the constraints that small liqueur and spirits producers have to face in the Azores.
A report allowing the European Commission to assess whether the reasons that justify the granting of the reduced rate continue will be prepared and submitted to that entity by 2011.