No outcry following tax hike on beer
What’s happened to Belgian media? Have they grown tired of complaining against price hikes on beer? Or are they saving the news of an 8 percent tax hike on beer, effective 1 August 2013, for the silly season next month, when brewers will have little choice but to pass the tax increase on to consumers?
The Belgian Brewers’ Association, at least, has reacted immediately and voiced its disapproval of the tax increase on beer, which the Belgian government agreed upon on 1 July 2013.
This is the first time since 1992 that the excise on beer has been raised. The excise on wine and spirits has already been put up by 12 percent in January this year.
At the moment, consumers will have little reason to complain about the price of beer as Alken-Maes has a half-price promotion running for a crate of its beer. Not to be left out, AB-InBev has its products on offer every three weeks, we have been told.
Nevertheless, the tax increase will weigh on beer sales, the association said. “We expect a decrease in volumes. Therefore, this decision will have little effect on state revenues."
To meet its commitments to the European Union to bring the budget deficit below 2.7 percent of gross domestic product (GDP) this year, the Belgian government decided to take additional measures worth EUR 226 million, including adjustments to levels of consumption tax.
The increase in the tax on beer will have a negative impact on prices in Belgium, i.e. it will make prices go up and thus add to the difficulties already faced by the hospitality sector.
In addition, the difference in beer prices between Belgium and its neighbour Germany will widen. “This will weaken our competitive position," the Belgian Brewers’ Association said in a statement.
The Belgian brewing industry is struggling to cope with the effects of a tax increase on beer of up to 160 percent in France as of 1 January 2013, which has affected the volumes of Belgian breweries.
Like Belgium, France has a gaping budget deficit and its government has opted for tax hikes, rather than cuts, to fill holes.
Trouble is that over 30 percent of Belgium’s beer output is exported to France. France’s brewers said recently that in the first quarter 2013 their beer volumes were down 15 percent year-on-year because the tax hike pushed up the price of a small beer by 20 percent or more. By contrasts wine, the French national drink, was not affected by the increase in excise duty.
The Belgian capital of Brussels isn’t the seat of the mighty European Commission for nothing. That’s why, Belgian brewers, supported by the Brewers of Europe, the pan-European brewing industry body, took the short route in June 2013 and lodged a formal complaint with the European Commission against the sharp increase in beer excise in France.
According to the complainants, this tax is discriminatory (against the foreign-owned brewers Heineken, Carlsberg and AB-InBev which control about 70 percent of the market) and protectionist (of France’s wine industry) and hence in violation of EU treaties.
After reviewing the complaint, the Commission may require France to withdraw or reduce the tax.
Some insiders say that the Belgian brewers stand a 50:50 chance that their complaint will be successful.
Well, even if they are, this does not do away with their own tax troubles back home.
