In September 2013, Romania increased the excise on spirits by more than a third (to €1,000 per hectolitre of pure alcohol) while wine remained at zero. The increase - nearly 40% - was justified as a financial counter-balance to a reduction in VAT on bread and pastry products, sectors where there was considered to be widespread evasion. In the spirits sector, however, there is also widespread tax evasion by producers of illicit products.
The upshot was that Romania ended up with 10% less excise collected compared to 2012 and a 17% reduction in the volume of legal products sold in the on and off-trade. It appears that consumption has not declined; but consumers have switched from legal to illegal sources. Not only has the increased tax rate reduced revenues for the government, it has also fuelled non-commercial alcohol - dangerous for the health of consumers. Romania is only one of the 15 examples of recent rates increases. Consumers – and producers – have had enough.
