E-Malt.com News article: EU: Increase in excise taxes on beer would be negative in terms of employment and tax collection

Arbitrary increases in excise tax across the EU would hit brewers hard just as the economy is striving to emerge from a deeply damaging recession, an independent study by PricewaterhouseCoopers, commissioned by The Brewers of Europe, states.

The study highlights the importance of the European brewing sector in terms of employment and the economy, and the possible negative impact of increasing excise taxes on beer across the European Union.

The Brewers of Europe commissioned this study to quantify the impact of excise taxes on the overall tax collection, and employment and profitability in the brewing sector compared to other alcoholic beverages.

Pierre-Olivier Bergeron, Secretary General, the Brewers of Europe, said: “The study provides strong evidence that arbitrary increases in excise tax would hit brewers - and the 1.8 million jobs created in the European hospitality sector generated by the brewing sector - hard just as the economy is striving to emerge from a deeply damaging recession. The study also shows that tax increases will ultimately NOT increase government revenues nor attain the expected levels.”

The study comes at a crucial time, with skyrocketing taxes on beer in some European countries as governments scramble to rake in cash. “At a time when regulators across Europe are looking at scenarios about taxation, we would urge them to give any plan a full economic reality check,” Pierre-Olivier Bergeron continued. “This study provides the data for sound judgments.”

A comparative cost analysis within the study shows that producers of alcoholic beverages constitute a significant industry within the EU, worth €242.5 bln in 2007 in terms of sales. Sales of beer account for the highest proportion by value - €111.5 bln or 46%. Beer contributed the highest amount of taxes to Member States across the EU and the lion’s share of jobs.

“This study shows that beer is the most expensive form of alcohol to produce,” observed Pierre-Olivier Bergeron. “So any move toward taxing all drinks based solely on alcohol content (‘unitary taxation’) would disadvantage a low alcohol beverage such as beer further in terms of cost of the product to the consumer.”

The study shows that an increase in excise taxes on the beer and hospitality sectors would be negative in terms of employment and tax collection. This is because increases in excise tax revenue are more than offset by decreases in the revenues obtained by the Government from personal and corporate income taxes, social security payments and, in some cases, from value added tax (VAT).

“The excise tax research shows that a 20% increase in beer excise taxes at national level across Europe would lead to loss of over 70,000 jobs and a fall in government revenues of €115 million EU-wide, due to lower sales and lower income from VAT and corporate taxes,” adds Pierre-Olivier Bergeron.

“Also an increase of current EU minimum rates of excise tax will have no beneficial impact on the EU’s internal market or on national treasuries concerned. Plainly this is an ineffective measure for improving public finances and detrimental for brewers.”

Bergeron concludes: “Europe’s brewing sector fully backs Europe 2020, the European strategy for smart, sustainable and inclusive growth. Our call for good sense and reason on the excise duty front fully meets the strategic objectives the EU has rightly set for itself, particularly in terms of fostering a high-employment economy.”

The brewing sector contribution from excise duties to national treasuries has been of €11.2 billion in 2008.


06 October, 2010