The Christian democrats from ruling coalition party KDH voted down the proposed hike in excise tax on beer today. The proposal was tabled by finance minister Ivan Miklos as the state tries to scrape up every penny it can to plug the public deficit.
Four MPs from the KDH party abstained from voting, which is enough for the fragile coalition to be blocked from passing legislation as it only has 79 of 150 seats in parliament, where a majority is required to enact laws.
Miklos was hoping to raise excise tax on beer by 27% for large breweries and by 22% for smaller ones, which in itself was a small compromise from a much higher increase of 49% that was originally proposed.
The four-party coalition has agreed already to compensate for the EUR 15 million outage that the budget will suffer from not pushing through the hike by getting it from KDH controlled ministries. Party leader Jan Figel will now have to draw up the proposals on how to cover the outage, which he must have ready by the time the vote on the state budget takes place.
Breweries have been rallying against the move since its conception, and the Slovak Beer and Malt Association (SZVPaS) made its opinion known by protests earlier. The breweries felt they had been discriminated against, especially as there is no excise tax on wine, for example.
The association released a statement earlier claiming that if excise duty on beer were to be increase, it would financially ruin the industry, which has registered falling consumption levels in the past few years already. So for all those who enjoy a cheap cold pint, it’s KDH’s round – “Na zdravie!”
The beer industry’s margins in this part of the World are down to around .09 EUR cents per liter so this tax increase would certainly be passed on. However beer is far too cheap here anyway and even without the excise increase producers should be able to enjoy slightly higher margins than one would expect from a simple commodity. However this is a supplier side mistake in the first place only amplified by the silly politics of this country and the fact that it doesn’t sound like the wine producers are going to be subject to the same conditions. totally unfair.