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Health Ministry notes positive impact of hike in alcohol excise duties

"Finance Ministry proposes to increase the excise tax by 20% in 2017, but we suggest it to be much higher."

Health Ministry notes positive impact of hike in alcohol excise duties
Photo: Photo: profinance.kz

The effect of the sharp rise in excise taxes on alcoholic beverages in 2016 was exceptionally positive, the head of department of tobacco and alcohol control of the Institute of Strategic Studies under the Ministry of Health, Kostyantyn Krasovskyy told a roundtable at Gorshenin Institute on 30 November.

"Finance Ministry suggests increasing the excise tax by 20% in 2017, but we believe it can be much higher. The experience of 2016, when excise duties grew 50-100% proved absolutely positive both in terms of revenues to the budget and health indicators," he said.

Krasovskyy said that in 10 months of 2016 alone, the increase in excise duties has generated to the budget an additional 3bn hryvnia.

"According to the State Treasury, from January to October 2016 budget revenues from the excise tax hit 10bn hryvnia. The revenues from beer excise taxes soared 81%, wine products - 37%, alcoholic beverage - 20%," said Krasovsky. "In the past years, the revenues were much lower, showing some growth only in 2014. In 2016, excise duties on most alcoholic beverages have been significantly increased, and generated almost 3bn hryvnia in additional revenues."

Meanwhile, the policy had an insignificant effect on manufacturers as they simply increased prices under the pretext of the tax hike, which, according to Krasovskyy, was good, because "if the price of a commodity goes up, its consumption drops".

The expert noted that mortality from alcohol poisoning went down in the recent years.

"Overall, alcohol deaths in recent years, when alcohol production and sale of beer, vodka and wine took a dive, show negative dynamic. While there were 11 thousand [alcohol-related] deaths [in the regions, except for the currently occupied] in 2013, in 2015 he had 9 thousand deaths. We have no full picture for the year 2016 yet, but the police statistics of road accidents, committed by drunk drivers, shows positive dynamics thanks to reducing alcohol consumption," Krasovsky concluded.