Russia’s Ministry of Finance wants to raise the price of vodka
Wars have started on less. Remember La guerra del fútbol, the four-day war fought by El Salvador and Honduras in 1969 over lost football matches? Should Russia’s Ministry of Finance push ahead with plans to quadruple the price of a half-litre bottle of vodka to over 400 roubles (EUR 10) by 2012 from less than 100 roubles (EUR 2.50) today, there will be a revolution Russia-style: everybody will be heading for their dachas, firing up illegal stills and producing moonshine.
In March 2011 Russia’s Minister of Finance Alexej Kudrin made another attempt to wean his countrymen and -women from vodka while filling up his tax coffers.
The current budget foresees a rise in alcohol taxes by 10 percent as of January 2012. The Minister does not think this is enough. He plans to raise it by 20 percent. In July 2012 there will be another tax hike as there will be in 2014.
All in all, excise on vodka could rise to 900 roubles (EUR 22.50) by 2014, running to a stream of almost EUR 15 billion in government revenues, it was reported.
Russia-watchers doubt that such an exorbitant tax hike will ever come into effect. The fact that it is scheduled to become law only AFTER the next parliamentary elections to be held in December 2011 is an indication that the Minister of Finance’s push for it is half-hearted at best.
In the past, the ministry has made several attempts to implement higher taxes on vodka and cigarettes but to no avail. In the end, Russia’s strong alcohol and tobacco lobby always had its way and ambitious goals were trimmed down to very moderate levels.
Regulating the sale of vodka smacks very much of political window-dressing. Last September, Moscow banned the sale of vodka in shops after 10 at night. However, the ban had very little material effect on vodka consumption around the capital as vodka is still freely sold late into the night at restaurants and bars that serve food.
Let’s bear in mind that no Russian government to date has been able to stem the production of moonshine. In 2009, unofficial vodka production was estimated at over 30 percent of total production, according to Synergy, a Russian drinks group.
Moreover, in March 2011 Russian parliamentarians decided to allow alcohol back into the Duma’s canteen, five years after drinking was banned in the building, Russian media reported.
Call that taking a tough stance against alcohol abuse?
