LONDON (CNNfn) - The European Commission rejected an attempt by member states Wednesday to save duty-free sales. The Commission plans to ban sales to intra-EU travelers beginning July 1.
EU states including the U.K., Ireland and Germany had asked the Commission to re-examine the impact on employment. Duty-free supporters claimed that thousands of jobs will be lost in the transport and retail manufacturing sectors while fares will rise to compensate for lost income.
The Commission rejected the claims in a report released by internal market commissioner Mario Monti. It said abolition would free up more than $2.2 billion in tax revenue for job creation in other sectors. Monti said there is no evidence that delaying abolition would save jobs in the airport, airline and ferry sectors, though the report suggested up to 56,000 jobs are under threat.
Duty-free supporters maintain that governments will overrule the Commission and accept a three-year reprieve. The International Duty-Free Confederation predicts the summer abolition will create chaos because there is no successor system for duty-free sales.
Shares in the ferry operator P&O (PO) fell sharply from 707 pence to 672 pence in early London trading while those of airport operator BAA (BAA) also slipped.