The European Union has incensed Germany by planning to boost taxes on the nation's most holy good: beer.
The German government has made clear that it will oppose any European Union bid to raise the cost of beer - and it's ready for a fight.
European Internal Market Commissioner Frits Bolkestein wants to harmonize taxes on beer and wine across the 15-member bloc. His aim is to even out prices in the EU states to counteract smuggling and fraud.
For Germany, the proposal would involve raising the beer tax by an estimated 30 euro cents ($0.29) on each case. It would also mean introducing a duty on wine, which is currently not imposed in Germany.
But the German federal government says it will not be part of it.
"There will be no increase in beer tax with us," a spokesman for Finance Minister Hans Eichel told reporters. He said Bolkestein's plans were not coordinated with other EU countries. "With this proposal, Bolkestein hasn't just surprised Germany, but also other member states."
Little harmony on harmonization
The EU has said in the past it wants to harmonize alcohol taxes across member states. But the proposal was met with protest from wine and beer-producing countries across Europe. The issue has now resurfaced because officials want to see if it can now gain majority support in the Commission.
That doesn't look likely. In order to change beer and wine tax laws, the EU would have to revamp its alcohol tax rate regulations. Such a resolution requires the unanimous agreement of all 15 member states. And Brussels cannot count on Germany in this case. "We will reject the proposal," Eichel's spokesman said.
The German Brewers' Association (DBB) welcomes Berlin's stance.
"Anyone who demands an increase in beer tax of almost 25 percent in light of the German brewing industry's current situation is completely misjudging reality," DBB director Peter Hahn said in a statement.
Although Germans are the second-biggest consumers of beer after the Czechs, per-head consumption has been decreasing over the past few years. According to DBB, the average German may have drunk over 123 liters (32 gallons) of beer in 2001, but that's down from the 131 liters consumed on average in 1997.
Taxes vary within Europe
The EU stipulates minimum tax rates for certain alcoholic beverages, as well as tobacco and oil products. In Germany, the beer tax is at the lower end of the scale, only Spain taxes beer less. Danish beer drinkers pay the highest taxes on their beverage of choice within the EU.
In addition to Germany, several other European countries have waived a tax on wine. Austria, Spain, Greece, Italy, Luxemburg and Portugal have also chosen not to impose a wine tax. Ireland and Britain, on the other hand, demand the highest wine taxes at, respectively, 273 euro ($267) and 258 euro ($252) per hectoliter (26.4 gallons).