The Commission argues that the current paper-based system is unable to cope with increasing levels of tax evasion, and fraud involving alcohol and tobacco is particularly prevalent. The system is deeply unpopular with traders, who find it cumbersome.

The new system would give Member States real-time information about consignments under way, enabling them to plan checks and inspections in advance. A feasibility study has estimated that it would take five years to get the system up and running from the time the work is put in hand. The Commission is aware that this is a lengthy development period, but says that it is inevitable given the complexity of a system connecting traders in the sector to the fifteen national administrations and linking the administrations to each other, operational 24 hours a day and 365 days a year. Computerisation of excise movements will be introduced in stages, with the most sensitive sectors (cigarettes and spirits) covered first.

It is estimated that around 80,000 individuals or firms will need to be connected to the system and the development and running costs are expected to be high, both for the Commission and the Member States. However, the Commission emphasises that the cost to their respective budgets will probably amount to no more than 5 per cent of the revenue lost to tax evasion in a given year.

'We need a computerised system to record movements of excisable products if we are to get to grips with fraud and tax evasion,' said the Commissioner responsible for taxation, Frits Bolkestein. 'The proposed new system will not only be much more secure, it will also cut red tape for operators engaged in trade within the Community.'