Spirit producers to lobby for tax cuts
By : Greg Goodale
Polands spirit makers are preparing to lobby the government for a reduction in alcohol excise taxes, which they claim are responsible for a tide of illegal imports and shrinking domestic sales.
Józef Kapela, chairman of the National Spirit Industry Council (KRPS), which represents the countrys 18 Polmos distilleries, said last week that the council is in the process of signing a contract with a lobbying firm that will launch a campaign aimed at the government in December. The campaign will push for a 10-15% reduction in the taxes, which were hiked by 18.5% this year.
The excise tax, which has been elevated to extreme levels in recent years, is restricting the sale of vodka and spirits, Kapela said. Until the tax is reduced, you cant expect any miracles.
The nearly 20% additional tax levied this year was intended to stem alcohol consumption in Poland, the third-ranked consumers of spirits in the world after Russia and the United States.
But according to Kapela, the KRPS-estimated 10% drop in spirit sales this year reflects a consumer shift toward spirits smuggled from Belarus, Slovakia and the Czech Republic. Alcohol smuggling will continue for as long as it is profitable and no administrative restrictions such as charging for border crossings will help, Kapela said.
According to research by the Institute of Economic Studies, 37% of the alcohol consumed in Poland entered the country illegally, which Kapela said carries a price tag of zł. 2 billion ($476 million).
But given the governments budget deficit, it is unlikely to implement any cuts to bail out the ailing Polmoses, said Bogda Sikorska, alcohol market analyst at CDM Pekao. To curtail smuggling, the tax cut would have to be very substantial because the difference in prices between the shops and the bazaars is huge, Sikorska said, adding that smuggled alcohol costs about 50% less than domestically produced spirits. Nobody will implement cuts of this size, she said.
