Korea: According to the National Assembly of Korea and the Ministry of Finance and Economy yesterday, 17 Grand National Party lawmakers have submitted legislation that calls for lowering the tax rate on beer from 100 % to 72 % to make it equal to the rate on distilled liquor, The Korea Herald reported in a statement on October 6.

Critics say that the government slaps the highest tax rate on beer to increase its tax revenue because beer is the most popular drink in the country. According to the National Tax Service's statistics on its tax revenue, the government collected 1.16 trillion won ($1 billion) in taxes from beer consumption, compared with 529.6 billion won from soju and 214.9 billion won from whiskey.

Under the liquor tax law, revised in 1999, the government more than doubled the tax rate on distilled liquors such as whiskey and soju, the vodka-like traditional distilled alcoholic beverage, to 72 %. While the beer tax rate was gradually cut from 130 % to 100 %, it is still the highest among all kinds of alcoholic drinks. The tax rate on wine is 30 %.

In the proposal, the legislators said that Korea's Liquor Tax Law promotes the consumption of liquor that has a high percentage of alcohol by imposing less tax on it than on low-alcohol drinks. "Because of the law, Korea's per-capita consumption of high-alcohol liquor is about twice as high as that of other advanced countries," they argued. "Korea's social cost of drinking is equivalent to 3.6 % of the gross domestic product, compared with 1 % to 2 % in other advanced economies."

But the Ministry of Finance and Economy, which controls the country's liquor tax policy, is opposed to the latest proposal, claiming that it is not the "global standard" to levy low tax rates on low-alcohol drinks. "The World Trade Organization differentiates distilled liquors from fermented alcoholic drinks," a ministry official said. "Therefore, it is not necessarily right to impose high taxes on strong liquors regardless of how they are made. Korea's high tax rate on beer reflects the fact that beer was a luxury item just 20 years ago."

07 October, 2003