Let's hear it for the death of duty free

The Man Who Pays His Way

IT'S ENOUGH to make you turn to drink, and light up another cigarette: after the longest-running "last orders" in history, the loophole which provides air and sea passengers within the European Union with a hidden subsidy has been closed. This is the last week in which cheap booze and fags can be sold duty-free within Europe; the tax holiday ends at midnight on 30 June. Five days from now, you can expect much weeping and wailing over the "loss" of cut-price whisky and Woodbines. And the inevitable increase in the cost of travel is to be applauded.

As someone who celebrates cheap and cheerful travel, and is not wholly unacquainted with alcohol and tobacco, how can I be in favour of price rises for everything from Channel ferries to Chanel No 5? Because, in the long run, transport within Europe will become a much more efficient and sensible undertaking without the help of earnings from the sale of luxury goods and dangerous drugs.

The cross-Channel operator Hoverspeed gave the game away last year, when it began to pay passengers pounds 1 to travel between Dover and Calais. The company calculated that it would make so much profit on selling cut-price alcohol and tobacco that the principles of economics could be turned on their head.

The motivation for millions of the journeys made across the Channel each year has nothing to do with a desire to expand horizons, see intriguing places and meet interesting people; it is simply to go shopping.

The Duty-Free Confederation is a powerful alliance of tobacco, drink and transport companies. For the last few years, it has warned that few of these journeys - and the attendant purchases of Scotch or Silk Cut presently made duty-free within the EU - will be made once duty is payable and the price goes up. Transport operators will be deprived of earnings (read "hidden subsidy"), and fares on ferries and airlines will rise - a return flight will cost pounds 15 more.

A bottle of Scotch to the first person who can demonstrate that the price of a particular flight has risen by pounds 15 as a direct result of the move; the only directly attributable rise is an extra 70p, levied by airport operators to cover their losses from duty-free sales.

Many of the cross-Channel trips will continue: you will still be able to bring back unlimited quantities of beer, wine, spirits and tobacco from EU countries, providing you can show that these are for personal use.

The irony is that the plunging value of the Euro makes it cheaper than ever to buy cheap, duty-paid drink and tobacco.

And you can bet a Montecristo to a Marlboro that the cross-Channel operators are devising crafty ways of taking maximum advantage of the lower rates of tax on alcohol and tobacco on the Continent.

The change in the tax regime is also an opportunity to see how much we have been taken for a ride for all these years. The fact that shops at Heathrow and Amsterdam airports plan to "absorb" the VAT on luxury goods shows just how much excess profit has been sloshing around.

u

THE AIRLINES may use the ending of duty-free to perpetrate the myth that Passenger Service Charges constitute a new tax, which is somehow tied up with the ending of duty-free. In fact, as was first revealed here in January, this "new tax" is neither new, nor a tax; it is merely one of the many costs of running an airline.

The Chancellor must be intrigued by the way the airlines have misrepresented fare rises as a new tax. Having seen how meekly most of the public have accepted the increases, Gordon Brown may decide to raise Air Passenger Duty (and that's a real tax, not something that airlines are pretending is one). "UNTIL NOW", trills Virgin Publishing, "seasoned travellers were only offered established, predictable guides, when what was really needed was a Virgin guidebook. Well, the wait is over."

Not strictly true. Richard Branson's organisation, which brings out its new range of city guides this week, has already dipped a corporate toe into the travel guide market; in the 1980s, Virgin published guides to the cities at each end of its premier route, London and New York.

The toe was removed pretty quickly, because no one I have talked to - not even Virgin Publishing itself - has a single copy of either of these guides, to compare how times and themes have changed in the intervening 15 years. The usual bottle of duty-free Scotch to anyone who can lend me one.

Ironically, the books were well ahead of their time in being sold on- board Virgin's Jumbos. From 1 July, the duty-free trolleys of the UK's biggest charter airline, Britannia, will carry books, not bottles, by writers such as Alex Garland and Tom Clancy.

u

VIRGIN PUBLISHING is able to use Mr Branson to promote its guides, but Footprint Handbooks has managed to call upon an even holier figure.

Imagine: you've just revised the second edition of the Tibet Handbook, and you need someone prominent to write a foreword for it.

There can be no better figure than HH Dalai Lama XIV, the spiritual leader of the Himalayan nation annexed by Communist China. Then, not only does he agree - he also gives it a ringing endorsement: "My congratulations to all who have contributed to this effort to make more readily available clear and reliable information about Tibet."

The writer, Gyurme Dorje, must have been delighted when he read the Dalai Lama's generous foreword, and pleased when the finished product arrived from the publisher.

Until he turned to page 7.

His Holiness is in full flow: "In an increasingly interdependent world," he proclaims, "a world in which information has such power, it is important that we extend our appreciation of all the peoples and environments with whom we share the plant."

That's "plant", folks. Either an e has eluded the editors or His Holiness is being rather more opaque than usual.