The government's move is being sold as a helping hand to producers of
alcoholic drinks and as a means to cut down on contraband booze.
Vodka and other strong-drink sales have been wilting; alcoholic
beverage producers say they have experienced a 60 percent slump in
sales over the past year and a half.
The government hopes its proposal would make the drinks more tempting
for consumers to buy and is hoping the Parliament, which must approve
the measure, will agree.
Excise tariffs on vodka, for example, would be reduced from 0.54
litas ($0.14) to 0.38 litas per 1 percent of alcohol concentration in
each liter. Likewise, excise duties on sparkling wines would be
dropped from 0.42 litas to 0.25 litas.
"Fewer people are buying stronger alcoholic drinks because, with the
excise duties, they have become too expensive. So one reason is to
boost the local alcohol industry," said Jonas Cekuolis, a spokesman
for the prime minister.
The move comes shortly after Rolandas Paksas' 100-days-in-office
address, in which he called for liberalizing the country's business
atmosphere, claiming Lithuania should be open for business,
However, the government says it is not promoting a boost in drinking.
The slump in alcohol sales is not necessarily because people are
drinking less, but because they are finding cheaper alternatives. The
current price for a bottle of vodka can run about 20 litas, leading
some people to buy bootleg alcohol, often from Russia or Belarus, at
rock-bottom prices.
"This also gives us a better possibility to fight against smuggling
and cheap illegal alcohol," said Cekuolis. "Two measures are
necessary to combat this. One is the strengthening of control on the
border. And the second is through economic measures. A bottle of
vodka, which now costs about 20 litas could cost 11 to 13 litas if
excises are reduced."
Cekuolis added that making the prices of legitimate vodka competitive
is worthwhile because sometimes the cheaper drinks are brought into
the country through legal ways.
"It is legal to bring in a half liter across the border," said
Cekuolis. "But some people will bring one bottle across the border
and then go back and bring in another. And go back and forth over and
over again. And this is legal. So we need to fight against this
economically as well."
But the government is not merely trying to save the skins of the
local alcohol producers. The state budget is currently on the cutting
board because revenue targets are not being hit.
During the first seven months of this year, revenues from alcohol
excises dropped by about 80 million litas. The government reasons
that a reduction of excises would boost beverage sales and lead to
more state revenue.
"Besides that, consumers will also benefit," said Cekuolis. "The
[legitimate] alcohol will be more affordable and people will know
exactly what they are getting - unlike with contraband alcohol
products. From what we've observed, a majority of Lithuanians are in
favor of the plan. Not because they can drink more cheaply, but
because it is a good decision for the economy."
The plan, however, is not yet the law of the land. The approval by
Parliament is still needed. It is expected that some MPs of the
opposition factions will vote against the plan.
But some new members of the Conservative Party-led coalition, the
Christian Democrats, may also throw in some negative votes based on
"moral grounds."
Christian Democrat Feliksas Paliubinskas told TBT that he was not
aware of who in his party was opposed to the reduction but said the
subject should be looked upon from both the economic and moral points
of view. In the end, he said the reduction could be justified.
"With the high excise duties on alcohol, consumption of alcohol had
not decreased and income to the state had not increased. So reducing
alcoholism should be dealt with in another way. I support a reduction
of the excise but also a program to combat the abuse of alcohol."
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