Beer prices will increase sharply, fear of contraband encroachment

The survey results of the Central Institute for Economic Research (CIEM), show that about half of beverage enterprises will reduce revenue and profit in 2020 and 2021 because of the epidemic. More than 79% of enterprises had to apply measures to reduce costs, over 58% stopped expanding production and business scale and reduced labor. The impact from the epidemic also caused businesses in this industry to cut 4-7% of their employees. The average income of workers decreased by 7-10% compared to before the epidemic.

Nguyen Van Viet, Chairman of the Vietnam Beer, Alcohol and Beverage Association (VBA), said that two years of the pandemic caused businesses in the beverage industry to reduce their output and revenue by 20%-30%. beverage decreased by 16% compared to 2019. Beer output decreased by about 1 billion liters in the past 2 years. This year, the situation is better when the measures to prevent and control the epidemic are lifted, tourism and food services are reopened, but the profit of this industry is not expected to improve, due to the price of raw materials. whether the input rose to a high level.

For example, raw materials for beer production such as malt have increased by 50%, Hublon flowers and sugar have increased by 15-20%, other ingredients have increased by about 10%, cans by 15%-30%, bottle caps by 30-35%. , in addition, the cost of petrol and transportation increased by 20%… Enterprises said that gasoline increased, transportation charges increased, raw materials increased, employee wages increased… but product output did not increase correspondingly. because of weak purchasing power. This makes production difficult.

Meanwhile, according to the “Strategy for reforming the tax system to 2030” approved by the Government on April 23, the management agency will develop a roadmap to adjust the increase in excise tax on tobacco and beer. , Alcohol.

Expert Ngo Tri Long said that the special consumption tax on beer and wine has been adjusted 4 times. Currently, the special consumption tax rate for beer is 65%, alcohol is from 35-65% depending on the alcohol content. Tax is calculated by value, i.e. a percentage increase in the tax rate based on the selling price. Meanwhile, on the market currently about 70% homemade wine, alcohol of unknown origin, beyond the control of State management agencies. It is a fact that for many years, the excise tax on alcoholic beverages has been collected only in the formal sector, losing revenue in the informal sector. This has created inequality with legitimate businesses.

When raising taxes, genuine businesses will comply with the provisions of the law, so the product will have to increase the selling price. Meanwhile, the State has no control over alcoholic beverages from the informal sector, so increased taxes further increase inequality. Not only that, high taxes encourage consumers to choose informal products, which are cheap but have no quality control. Thus, increasing taxes on formal alcoholic beverages generally incentivizes informal product production and increased smuggling.

In Sri Lanka, when the Government increased the excise tax on beer to 70%, while alcohol was only 25%, it made beer expensive, pushing consumers to use higher alcoholic beverages. or of illegal origin, at a cheaper price.

Expert Ngo Tri Long said that the tax on beer and wine should be changed from current value to based on alcohol concentration. That is, the higher the alcohol content of beer and wine, the higher the tax will be. In the world, many countries have implemented and shown that this is a fairly fair and transparent mechanism that both increases competitiveness and helps regulate abuse of beer and alcohol, Mr. Long said.

Also in Sri Lanka, since 2017 when converting the tax calculation by value to alcohol content, it has helped improve the business environment of the beer industry, increase budget revenue, and significantly reduce the consumption of alcohol and beer. illegal.

Tran Thuy