Reducing the alcohol excise will not protect producers or consumers any more

5 april 2016 | RBC-TV

On 1st April stores and restaurants will have their alcohol licenses automatically revoked unless they have registered with the national state automated information system (EGAIS). Should we expect to see sales stop and does history know about any other similar attempts elsewhere in the world to monitor the entire alcohol market? Those are the questions the Analytical Center's expert Elena Razumova tried to answer on RBC-TV.

Elena Razumova
Elena Razumova
Department for Expert Analytics

The expert noted that much of the budget revenue in Russia comes from alcohol sales. “The share of revenue coming from alcohol to the federal budget is 2-3%, which is actually quite a lot and that explains the close attention the government is paying to the alcohol market,” Ms. Razumova said. The Government has been trying very hard to ensure all alcohol sales happen above board and get accounted for.

With the introduction of the new system, stores may run into a broad range of problems: technical malfunctions, lack of documents to get permits and many others, the expert believes.

At this stage it would be impossible to copy-paste the European system in Russia. “The excise is levied differently there: manufactures ship their merchandise to stores that excise is levied on and then retailers get it from there. This means the manufacturers do not pay the excise,” Ms. Razumova explained.

Total control of alcohol sales is very important for Russia because there is a lot of counterfeit alcohol on the market, Ms. Razumova believes. “The excise has been raised. Rolling it back will not bring back the lost market share now. If we were to reduce the excise by 10% now, the amount of above-board deals would not magically go up 10%, because there is already a black market in place and people have already got accustomed to it. Thus, reducing the excise now will not protect either the producers or the consumers,” Ms. Razumova said.

There is also the problem of trans-border internal alcohol imports. “In some regions the share of counterfeit alcohol is as high as 40% and that is a lot,” Ms. Razumova concluded. In her opinion, the problem is not just about open borders but the fact that making alcohol in Belarus or Kazakhstan is cheaper. “It is possible that eventually the use of the state automated information system will be a requirement not just in Russia but throughout the entire Eurasian Economic Union,” she summed up.

Source: RBC-TV