The Sejm this week will discuss lowering taxes on spirits.
The move comes as the industry's payments to the state treasury have dropped and privatizations efforts have been hindered by high tax rates.
"Turnover throughout the sector has fallen drastically and we need to find out the causes," said the Law and Justice's (PiS) Wiesław Walendziak, head of a Sejm Treasury Committee team set up to look at the matter. "One thing is clear
taxation policy must not reduce tax revenue
The current form of taxation means that companies are contributing less to the treasury than they did when taxes were lower."
The team, scheduled to present its findings this week, was appointed after a report by the Supreme Chamber of Control (NIK) concluded that spirit taxes had reached the point of diminishing returns and contributed to the government's limited success in privatizing the Polmos distilleries.
The tax on 100 liters of pure spirits was raised from zł. 4,500 in 1995-1996 to zł. 6,020 in 2000, an increase of 33%. The NIK report said that revenue from taxes on spirits fell to 3.4% of total revenue in the first half of 2000 from 4.6% in 1996.
Walendziak would not comment on the team's likely recommendations before its findings are presented but he said the poor standing of the Polmoses would not be sufficient grounds for a tax cut.
"This is a sector that is undoubtedly in a difficult situation and the current taxation policy is not helping," Walendziak said. "I don't think the interests of a particular industry are a sufficient recommendation for a reduction in alcohol tax."
High excise taxes and a deluge of smuggled alcohol are also painful for private producers, said Bogna Sikorska, an analyst at Warsaw brokerage CDM Pekao. According to research by the Institute of Economic Studies, 37% of the alcohol consumed in Poland entered the country illegally, depriving domestic producers of around zł. 2 billion ($488 million).
Although annual alcohol consumption has stabilized at around six liters per head since 1998, spirits have fallen out of favor as the drink of choice in Poland since the start of the country's economic transition. Per capita consumption of spirits fell to two liters in 2000 from 3.5 liters in 1992 while spirit sales have fallen to just over 29% in 2000 from 55.84% of all national alcohol sales in 1995, according to the State Agency for Solving Alcohol-Related Problems (PARPA). PARPA estimates that 800,000 Poles are addicted to alcohol, while up to 2.5 million drink alcohol in harmful quantities.
