The Association of Employers Polish Spirits Industry and the Polish Vodka Association were surprised by the statement of the representatives of the brewing industry, which was published on 1st July in the Rzeczpospolita daily. The above position refers to the long-standing postulate of equalizing the rules of taxation for particular types of alcoholic beverages in Poland with excise duty. Since the statement of the representatives of the brewing industry contains a number of accusations not supported by factual arguments, we decided to refer to it.
The current Polish rules for calculating excise duty clearly favour beer. An identical portion of pure alcohol contained in vodka or other spirit drink is subject to excise duty several times higher than that contained in beer (in some cases even three times). The share of excise duty in the price of a spirit drink may even exceed 50% (for example, a bottle of vodka at PLN 20 is subject to excise duty of PLN 11.41). As a result, the spirit industry pays over PLN 7.5 billion annually for excise duty, while the beer industry pays PLN 3.5 billion, although its share in the market of alcoholic beverages is much higher than that of producers of spirit drinks. Paradoxically, only 30.14% of excise duty in the alcohol industry is paid on account of beer whose share in consumption (converted into pure alcohol) amounts to as much as 57.80%. On the other hand, spirit products, which are responsible for 35.20% of pure alcohol consumption, account for as much as 66.55% of the excise tax value in the entire alcohol industry.
For these reasons, it is justified to change the way excise duty is calculated by aligning the fiscal burden on the turnover of the same quantity of alcohol (irrespective of the type of drink in which it is contained). All alcoholic beverages, beer, vodka or whisky contain the same substance - ethyl alcohol.
Alignment of fiscal burdens will contribute to better competition and create the basis for sustainable development of all economic sectors related to the production and marketing of alcoholic beverages, and not only the brewing industry.
Unfortunately, representatives of the brewing industry are trying to frighten the public opinion with claims, not supported by any evidence, that equalisation of excise duty on all alcoholic beverages will result in an increase in vodka consumption. They also seek to create the impression that any negative effects of alcohol abuse are exclusively related to the consumption of spirit drinks, which is not the case. The intentions of the authors of the statement of the brewing industry are revealed in the final part of the letter, which explicitly states that the current price level (resulting from low excise duty rates on beer) "protects the Polish market from an uncontrolled influx of beers brewed in foreign breweries". Therefore, the brewing industry perceives the preferential rules of excise duty on its products as one of the ways of building a competitive advantage and treats any attempts at levelling the fiscal burden as an attack on the sphere of its financial interests.
Preferential rules of calculating excise duty as well as the introduction of public advertising and promotion of beer by law have contributed to a significant increase in beer consumption in recent years. According to data published by PARPA, beer consumption in Poland has increased more than 2.5 times since 1995 (on average per capita: 1995 - 39 l, 2017 - 98.9 l). Under these conditions, there are no rational reasons for maintaining a more favourable excise duty burden on beer, all the more so as it was the increase in beer consumption that caused the average consumption of pure alcohol in Poland to reach the level from the times of the People's Republic of Poland.
For all alcoholic products, excise duty should be calculated on the basis of pure alcohol content as the only objective criterion.
It is difficult to agree with the thesis contained in the statement of the brewing industry that the justification for drastic differences in excise duty taxation is allegedly the three times higher cost of alcohol contained in beer. First of all, the current excise mechanism does not take into account the price of alcohol production in a specific product at all. Secondly, citing the cost of producing beer or spirits without specific examples is misleading to the public. The cost of individual products may differ significantly depending on the type of product, segment, cost of raw materials or individual components of the production process.
It is no longer justifiable to maintain drastic differences in the tax burden on alcoholic beverages solely on the basis of the type of product. We would like to emphasise that we are not asking for a reduction in excise duty on spirit drinks or for discriminatory treatment of beer, wine or other alcohol. We only propose that the rules for calculating excise duty should be imposed on all producers of alcoholic beverages in a uniform and equal manner
Such a solution will be compliant with the constitutional principle of equality, will contribute to fair competition on the market of alcoholic beverages and will allow to obtain higher budget revenues.
The statement included in the declaration of the beer industry that "Poland would become the first country in Europe where vodka and beer would be taxed in the same way" is also untrue. In the vast majority of European Union countries – including all countries which, similarly to Poland, are known for their spirit products due to their tradition, culture and climate – beer, vodka, whisky and other spirit products are taxed in the same way – based on pure alcohol content. This is the case both in the countries famous for their vodka: Sweden, Finland, Estonia, Latvia, Lithuania as well as for their whisky: Great Britain, Ireland or slivovitz: Slovenia, Hungary and Slovakia. In countries with strong beer traditions – such as Germany, the Czech Republic, Austria, Belgium – beer is taxed depending on the plato level.
The statement of the brewing industry that levelling out the rules for calculating excise duty will lead to a "return to harmful and pathological drinking" is unjustified and ignores the fact that the health and social risks resulting from exceeding the barrier of responsible consumption apply to all types of alcoholic beverages. It is not without significance that in most cases the alcohol initiation of young people starts from beer as it is a cheap and widely advertised product, also at various events, including sporting events.
In recent years, representatives of the spirit industry have been involved in a number of comprehensive activities, including social campaigns aimed at building a culture of responsible drinking of alcoholic beverages. In accordance with Polish law, the spirit industry does not conduct public advertising or promotion of its beverages - in contrast to the brewing industry, whose advertising is very frequent in the media and public space. Therefore, we appeal for moderation in further discussion on the issue of tax discrimination of the spirit industry.
The Association of Employers Polish Spirits Industry
The Polish Vodka Association