Brewers claim beer tax hikes would backfire

By Guy Montague-Jones

- Last updated on GMT

Related tags Tax

A new study conducted by PricewaterhouseCoopers (PWC) suggests that hikes in excise taxes on beer could backfire and ultimately eat into tax revenue.

Governments across many European countries have been putting up taxes on beer in an attempt to rebalance the books in the face of the recession. One of the most notable examples is Russia which imposed a 200 per cent increase in excise duty on beer in January this year.

Reacting to this new tax threat to the beer industry, the Brewers of Europe commissioned financial services firm PWC to conduct an independent study into the impact of increased taxes on beer in the EU.

Impact on jobs

The results of the research indicate that increased taxes may squeeze the beer and hospitality sectors and could threaten jobs. This could mean that higher taxes actually have a negative impact on government revenue because of lower receipts from personal and corporate income taxes, social security payments and value added tax (VAT).

Pierre-Olivier Bergeron, secretary general of the Brewers of Europe, said: “The excise tax research shows that a 20 per cent increase in beer excise taxes at national level across Europe would lead to the loss of over 70,000 jobs and a fall in government revenues of €115m EU-wide.”

Bergeron told that the negative effects would be felt almost immediately. He said: “Outside the study the Czech brewers reported to the Brewers of Europe after the summer this year that the excise duty increase on beer by 33 per cent from 1 January had resulted in 12 per cent lower sales and lower tax revenues at half year.”

“Economic reality check”

The beer industry spokesperson concluded that the PWC research provides data for policy makers to consider as they weigh up options for tackling bulging government deficits.

Bergeron said: “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. This study provides the data for sound judgments.”

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