Translated material
Gosalkokontrol
The state has not yet figured out how to regulate the liquor industry
Between the first and second reading of the draft law introducing a de facto state monopoly on the circulation of ethyl alcohol, deputies must decide on the mechanism for the work of the body that will oversee the entire alcohol industry.Last week, the State Duma finally approved in the first reading amendments to the law “On state regulation of the production and circulation of ethyl alcohol, alcoholic and alcohol-containing products”, which should give the state the exclusive right to regulate the circulation of alcohol. Last summer, after the president announced the need to introduce an alcohol monopoly to combat the deaths of people from low-quality counterfeit vodka, very quickly, within a few months, amendments were prepared (and immediately adopted) to seriously tighten the circulation of alcohol.
Already in January of this year, a new procedure for licensing, importing and accounting of alcoholic products began to operate. Factories were required to equip their production with alcohol meters, the data from which would have to be fed into the unified state automated system for recording the volume of production and turnover of alcohol (USAIS). From July 1, 2006, mandatory prepayment will be introduced for market participants when purchasing alcoholic products, which should force small traders out of the market. However, the most important point remained in question: whether there would be a special state body to control the production and circulation of alcohol.
The current amendments go much further than what was started last summer. The deputies attempted to describe the intended functions of the body to control the volume of production, supply and purchase of raw materials. It is through this state intermediary, a body authorized by the government, that it will be possible to buy and sell alcohol. To purchase alcohol for production, distilleries will have to submit a purchase application to the authorized body. The application will not be satisfied if the plant does not simultaneously provide a certificate from the tax authority about the absence of debt to the budget and a certificate of prepayment (in extreme cases, a bank guarantee for the amount of excise taxes). Knowing how tax officials work with enterprise reporting, suddenly issuing demands for payment of incorrectly calculated taxes, one can guess how long factories will wait for permission to purchase alcohol.
The government will have the right to approve minimum selling, wholesale and retail prices for alcoholic products sold in the country. The state will also exercise control over the production capacity of distilleries. All of them will have to undergo accreditation and register their maximum installed production capacity. As Duma Speaker Boris Gryzlov stated at a meeting of the chamber, the ban on the production of alcohol using unregistered equipment was introduced in order to supplement the already created system of administrative control measures with control at the very initial level of the functioning of the alcohol market.
To ensure that vodka factories do not underestimate production volumes, the amendments propose transferring the excise tax from vodka to alcohol. Today, the excise tax is divided: distilleries pay a smaller part, and distilleries pay the main part after shipment of products. It is at this stage that the main frauds with excise taxes occur.
According to one of the developers of the bill, Chairman of the State Duma Committee on Economic Policy Valery Draganov, a significant part of alcohol in the regions is still fake, and the share of shadow turnover in the Russian alcohol market is at least 50%. However, as the deputy assures, nationalization does not threaten alcohol enterprises; the monopoly will only extend to control over every drop of alcohol. “There is a state monopoly on alcohol in Belarus, Bulgaria, Norway, and partially in Canada, Sweden, and Finland,” he recalled.
If the bill is finally adopted in its current form, the amendments will come into force on January 1, 2007. True, many points are still in question: how often alcohol prices will be reviewed and which official will monitor compliance with state prices on the territory of such a large country, how quickly applications for the purchase of alcohol will be considered and, finally, whether it will be possible to exceed the agreed volume of alcohol production , if business development requires it.