Baltic brewers unhappy about planned tax hike

  • 2006-10-04
  • By Todd Graham

CHEERS: Baltic brewers are ready to fight the EC's plan to increase excise taxes on beer, one of the region's most prized products.

RIGA - Baltic brewers said they were opposed to the European Commission's plan to increase the minimum excise rates on beer while allowing member states not to impose any duty on wine. Representatives of the associations claimed in Vilnius on Sept. 26 that the proposed increase amounted to discrimination against the beer industry. "We are calling on the national governments not to back this initiative," they said in a statement.

The brewers welcomed the EU's initiative to tighten regulation of the alcohol market but criticized the planned measures and directions as too straightforward and failing to take into account differences in alcoholic beverages and of different traditions in EU member states.

Audrius Vidzys, president of the Lithuanian Brewers' Association, said that if the increase in excise duties on beer was approved, Lithuanian brewers' expenses would rise by around 30 million litas (8.7 million euros) annually.
"Eighty-seven breweries currently operate in Lithuania. Most of them are small and are teetering on the brink of losses. I do not think that brewers are likely to raise beer prices if the excise duties go up. As a result, many small companies may need to close," Vidzys told a news conference.

His colleagues in Europe agree. During the conference Rodolphe de Looz-Corswarem, secretary general of the Brewers of Europe association, said, "These initiatives are discriminatory, since the EU does not even speak about the possibility of levying an excise duty on wine." Currently no taxes are added to wine at the EU level. Wine is one of the EU's major export products, particularly to the lucrative U.S. market.

He added that brewers were also opposed to the commission's proposals to impose uniform age limits on alcohol consumption, advertising restrictions and other measures throughout the European Union.
Vidzys said that, based on unofficial information authorities from Germany, Czech republic, Spain and Luxembourg intend to back their beer producers.

Latvian producers are equally in opposition to the tax increase and expect backing from the government.
"We submitted a letter to the Finance Ministry on Sept. 25 stating our opposition to the proposed EU tax hike. We expect them to support us but no official announcement from the ministry has been received," Peteris Linins of the Latvian Beer Producers association told The Baltic Times.

Also, taxes on Latvian beer are expected to rise 31 percent as a result of the rise in excise duties, and that this combined with a situation of high inflation in general will see a rise in price, especially for smaller retail outlets.
If the EC plan were approved, excise duties on beer in Lithuania would rise by around 21 percent, or 0.05 litas per half a liter of beer. EU wide, the price of a 0.5 liter of beer will rise about 0.01 euro. Member states would be able to phase in the new rates from 2008 to 2010.

According to a 2006 report prepared by Ernst & Young, a major international accounting firm, the contribution made by the brewing sector to the European economy, in terms of value added is 57.5 billion euros, or equivalent to the GDP of the Polish or Austrian economy in the last quarter of 2004.