On May 23, a group of young men did something in front of the parliamentary committee building that should’ve got them arrested: smashing beer bottles. The police stood by and watched the incident, which was an act of activism, not hooliganism. And the act of political theater was staged to urge parliament to triple the beer tax.
Proposed by a cross-party group of lawmakers, the bill would levy an excise tax of Hr 2.50 per half-liter bottle of suds, up from the current Hr 0.87. The bill’s authors think this will ultimately raise the price of beer by Hr 1 per bottle. But brewers say it won’t affect sales much.
The lawmakers who represent a group called For Sober Ukraine hope that a price hike would be enough to decrease youth beer consumption. They also want to channel most of the proceeds to reconstruct Okhmatdyt, the country’s main hospital that treats children suffering from the gravest diseases.
But Hanna Hopko, member of the board of trustees of Okhamatdyt clinic, said this was “only the beginning.”
“Of course beer should cost at least Hr 10, not the Hr 5 to Hr 7 it does now,” she said. “But you see, we want to raise excise duties by three times, but the beer companies are already shouting that raiders are seizing their business.”
Andriy Pyshnyi, a co-author of the bill told TVi that in the Russian Federation excise duties for beer are 4.5 times lower than in Ukraine and in comparison to Great Britain or Finland – 15 to 20 times lower.
A separate bill written by the same parliamentary group wants to allocate 65 percent of money collected form the new beer tax for medical purposes. Half the money would go to the Okhmatdyt clinic, the other half to the clinic’s regional branches and for the Institute of Cancer as well as for other medical purposes.
Experts estimate this could come to Hr 4 billion ($500 million).
The revenues and duties ministry has proposed a similar idea, saying excise duties for beer should be increased to Hr 4.43 per liter and that brewers would have to obtain special registration at the ministry.
This bill, however, have not yet been made available on the parliament or ministry websites.
But critics claim the two new legal initiatives are aimed not at protecting children but rather stronger alcohol producers, who won’t be affected by the tax hikes.
“We believe that (the beer tax bills) are aimed at putting pressure on the breweries and creating more favorable conditions for competing segments of the alcohol industry,” said Liudmyla Nakonechna, director general of SUN InBev Ukraine, to Interfax-Ukraine. “Let’s be honest: this is obvious,” she added.
Petro Chernyshov, director general of Carlsberg Ukraine, said the new excise duties may push the company to close of one of its brewing plants in Ukraine and fire thousands of employees.
The anti-alcohol campaigners refute this claim.
“It is nonsense to say that a 20 percent increase in price may kill the industry,” said Kostiantyn Krasovsky, director of Alcohol and Drug Information Center, adding that beer companies expressed the same fears in Russia in 2009 excise duties increased by more than three times.
But in fact “beer consumption significantly decreased among the youth and only slightly among adults,” he added.
Health officials say that when the beer tax rose by 2.5 times in 2009-2010 in Ukraine, it led to a decrease in alcohol consumption among teenagers. In 2006, Ukraine ranked first in Europe for the number of alcohol drinkers aged 11-15 years. Today, Ukraine ranks second behind only the Czech Republic.
Chernyshov said that there is a direct link between beer consumption and alcoholism.
“Now one gram of alcohol in beer is taxed lower than in vodka or wine, so alcoholics choose strong beer as the cheapest option,” he said.
Kyiv Post staff writer Oksana Grytsenko can be reached at [email protected]
