Europe’s Governments will suffocate their tax revenue and erode beer industry profits if they raise excise duty on beer any further, according to a PricewaterhouseCoopers study.
A 20% rise on beer excise tax across the EU would reduce beer industry profits in Europe by a tenth, according to the study, which was published today (6 October) by the trade body Brewers of Europe.
Job losses and lower consumption, as a result of tax rises, also means less money for Government coffers, the report shows. A 20% tax rise in each EU Member State would lead to around 70,000 industry job losses. It would cut Government revenues by EUR115m, once lower corporate and employee income tax payments have been taken into account.
“At a time when regulators across Europe are looking at scenarios about taxation, we would urge them to give any plan a full economic reality check,” said Pierre-Olivier Bergeron, secretary-general of the Brewers of Europe.
The PricewaterhouseCoopers model shows disparity between EU states, reflecting differing starting points on beer excise tax. However, it warns that the on-trade would bear the brunt of any further tax rises.
A unitary taxation system, which is one of the options in the UK Government’s current review on alcohol taxation and pricing, would be the worst option for brewers, says the report. If beer was taxed at a set rate per alcohol unit across the EU, the brewing industry profit pool could shrink by two thirds and beer consumption would likely fall by a fifth.
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By GlobalDataPricewaterhouseCoopers’ study is based on analysis of seven coutries: UK, Poland, Spain, Czech Republic, France, Germany and Finland. In its estimation of Government revenues, the report does not take into account the prospect of redundant workers finding alternative work in sectors outside of the beer industry.
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