In November 2015, the Belgian Government decided to raise excise tax on alcohol beverages, reinforcing the discrimination against spirits. Excise tax was raised on spirits by 41% (+71% since 2013) compared to beer (+17% since 2013) and wine (+ 59% since 2013).
In Belgium, like in many other European countries, consumption of spirits represents less than 15% but contributes to 40% of the excise revenues. It is hard to understand such an unfair treatment. A unit of alcohol is a unit of alcohol. There is the same quantity of alcohol in a 250ml glass of beer as in a 100ml glass of wine or 30ml short of spirit, i.e. 10g of ethanol, so why such a discrimination?
The results of the tax increase are already visible. A 16% decrease in sales in the retail sector, a 50% decrease in the on-trade and a 33% decrease in sales by producers. We can expect a negative impact in terms of investment and employment along the production and distribution chain. This is certainly not the outcome planned by the Government!
Between January and July 2016, the Belgian Exchequer was expecting an extra €128m in excise revenues but the reality is very different. Only €40m was collected and because volume of sales decreased, the Government is also registering a €66m decrease in VAT revenues. Final result: a net loss of €26m.
Some might think this would represent a decrease in alcohol consumption but data collected in retail shops in border countries are showing + 40% increase sale of spirits in Luxembourg and sales have doubled in the North of France compared to the rest of the country (no data available yet from Germany and Netherlands). Today, we estimate that 1 bottle out of 4 consumed in Belgium is purchased outside the country
Belgian producers and distributors are calling on the Belgian government to go back to the excise level from before November 2015. They are taking the example of the Netherlands which had substantially increased excise rates in 2003 and had to reverse that decision given the loss in revenues. The UK also decided to freeze and then reduce slightly the excise tax on spirits with positive results so far in terms of jobs and revenues.
