Jan de Grave / Director - Communications.
05/10/2010 | Economy
New study shows beer tax increases would jeopardise economic recovery
Brussels, 6 October 2010: An independent study by PricewaterhouseCoopers, commissioned by The Brewers of Europe, 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 €242.5bn in 2007 in terms of sales. Sales of beer account for the highest proportion by value - €111.5bn 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.”
*About excise duties
Excise duties are taxes charged on specific goods such as beer or other alcoholic beverages.
They may be imposed at any stage of production or distribution and are usually assessed by reference to the weight or strength or quantity of the product. In the case of beer they are levied on their alcohol content or plato content per volume.
The basic rules for setting the duties are set out in a number of EU Directives, however each EU member state may establish its own level of rates of excise duty which means that EU countries have different rates than others.
The brewing sector contribution from excise duties to national treasuries has been of €11.2 billion in 2008.
About The Brewers of Europe
The Brewers of Europe, founded in 1958 and based in Brussels, is the voice of the European brewing sector towards the European institutions and international organisations. It has 27 members, comprising 24 national brewer associations from most EU Member States, Norway, Switzerland and Turkey. Among the roughly 4,000 brewers across Europe, the vast majority are small and medium-sized, local and family-run businesses. 2.5 million jobs are directly or indirectly linked to the European brewing sector.
For more information:
Head of Communications, The Brewers of Europe
Tel: +32 (0)2 551 18 14 (direct)
Mobile: +32 (0)497 97 67 65