European Electronics Tax Under Fire

The EU Commission received a formal complaint over the levy, said to damage Europe's electronics industry.

BRUSSELS—The European Commission has received a complaint that a disputed levy on electronic gadgets to compensate for private copying of music distorts the EUs internal market, a top official at the blocs executive said.

Internal Market Commissioner Charlie McCreevy said on Dec. 19 that the complaint was made to Industry Commissioner Guenter Verheugen but had no further details.

"Verheugens services have received a formal complaint on the way the levy is applied to create obstacles to the free movement of goods," McCreevy told the European Parliaments legal affairs committee.

"I intend to come back to this debate in 2008, having learnt from previous experience," McCreevy said.

McCreevy was forced to abandon his proposal to reform the levy on blank CDs, MP3 players, printers and other gadgets in 2006. The levy varies enormously across the 20 EU states that apply it. Britain and Ireland have no levy at all.

The tax at import level is often passed on to consumers and raised 560 million euros ($806.7 million) in 2005.

Last years retreat came after then French Prime Minister Dominique de Villepin intervened to say McCreevys plan to reform the levy would threaten Europes cultural heritage.

British liberal lawmaker Sharon Bowles told the committee that if the "tax" could not be scrapped, at least it should be made more transparent to consumers.

"In technology terms, the levy is a system from the dark ages that is superseded by developments. It damages our electronics industry," Bowles said.

Some of the cash raised goes to national coffers to fund cultural activities in states such as France and Finland.

French centre-right lawmaker Jacques Toubon said 35 percent of income for artists in Europe came from the copying levy and it could not be reformed without something to replace it.

McCreevy said he had "licked his wounds" after last years setback.

"This issue is not going to go away," McCreevy said.