The economic crisis has had multiple, interconnected, negative effects on our businesses. Not only has it knocked a hole in the pockets and wallets of our consumers, thereby dampening demand, it has also left large deficits in many exchequers, shortfalls that Finance Ministers have sought to make up through increased taxation of our products. Regrettably, squeezed wallets and inflated prices offer an open invitation to criminals selling counterfeit or illicit alcohol products. A perfect storm.
We support fair taxation and understand its need. But the increases we have witnessed over the recent past cannot be considered fair. Excise increases of up to 60% in recent years have had a huge impact on our sector including a disproportionate effect on our SME distillers whose markets are more local, less international. In the case of Greece for example, excise increases of 125% between 2009 and 2012 have led to the collapse of the legitimate market. Tax paid sales have fallen by half; excise revenues are lower in real terms in 2015 than 2009; an illicit market has flourished.
Our key messages to decision makers are:
- Excise tax on alcohol beverages should be fair and equitable.
- Excessive taxes depress revenues, growth and employment and create an excessive burden on consumers.
- Member States should reduce the economic incentives that allow informal markets to flourish.
- In terms of health policy, tax is a blunt instrument that impacts on moderate drinkers without having meaningful impact on those with risky drinking behaviours.
- Alcohol-related harm is not likely to decline with Minimum Unit Pricing.