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Beer brewers: fooling around with tax reforms could destroy Latvia’s beer industry

Peteris Linins/mpkv.lv.
By increasing excise tax for beer, the goal of reducing alcohol consumption will not be achieved. This is because consumption of other alcoholic beverages will increase as a result, notes CEO of Latvian Breweries Union Peteris Linins, commenting on the government’s plans to raise excise tax for beer.

He emphasizes that Finance Ministry has developed a new tax policy under which beer will be subjected to the most rapid excise tax increase – 25%. Other alcoholic beverages will be subjected to tax rise of 15%. «Aside from Finance Ministry’s proposal, which is already unfavourable the most towards beer, representatives of strong alcohol with Imants Paradnieks at the help are lobbying an even bigger excise tax increase for beer in order to make strong alcohol even more accessible to residents, which goes against what officials are saying about plans to reduce alcohol consumption in the country.»

He notes that the first four months of 2017 have seen a 10% increase in consumption of strong alcoholic beverages (vodka, cognac, brandy, liqueur, whiskey), whereas beer consumption has grown only 1%, and this happened only because cross-border trade with Estonia.

He also adds that one other important factor to consider that following Paradnieks’ proposals, the Saeima has voted in favour of restricting PET packages, which is expected to reduce beer sales by at least 20% next year. «If excise tax is also increased on top of that, the decline will be even more dramatic.»

Linins reminds that there are more than 40 breweries registered in Latvia. Most of those breweries are situated in Latvia’s regions, stimulating the economies there. «Unfortunately, this new policy forces puts breweries situated in regions with high unemployment levels at risk. On top of that, unreasonable excise tax increase would be a double strike against breweries, because the recent decision to prohibit 2 litre PET bottles basically means write-off of investments directed to the modernization of PET production line. This restriction will come into force in six months.»

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