26.04.2011, 17:48:47

Hold your horses

The Ministry of Finance moderated the future growth of excise taxes on vodka and cigarettes

The nightmare of many Russians - a sharp rise in the price of vodka and cigarettes - will not become a reality in the coming years. The Ministry of Finance agreed to increase excise taxes on alcohol and tobacco gradually. Prime Minister Vladimir Putin once again forced officials to curb their appetites, as he noted that the burden should not be shifted from business to ordinary citizens.

In March 2011, the Ministry of Finance prepared traditional proposals for selective tax increases to replenish the budget. The ministry calculated that the Russian treasury will be able to receive a total of 1.9 trillion rubles in additional revenue in 2012-2014 by increasing excise taxes on alcohol and tobacco, canceling some of the property tax benefits and increasing the mineral extraction tax on gas.

The growth rate of excise taxes on alcohol and tobacco, which were announced by the Ministry of Finance, turned out to be very impressive. In particular, the “alcohol” excise tax was supposed to quadruple by 2014. It was assumed that from January 1, 2012, the excise tax on alcohol will increase by 20 percent to 277.2 rubles per liter, from July 1, 2012 - to 462 rubles, from 2013 - to 693 rubles, and from 2014 - to 900.9 ruble

The “tobacco” excise tax, according to the calculations of the Ministry of Finance, was supposed to grow at the following rates: in 2012 - by 60 percent to 448 rubles per thousand of any cigarettes, from 2013 - to 672 rubles, from 2014 - to 873.6 rubles. As Russian Deputy Prime Minister and Finance Minister Alexei Kudrin noted in early April, excise taxes on tobacco should be increased annually in such a way as to reach the European level by 2015 (an average of 64 euros per thousand cigarettes).

The additional budget revenues received due to the increase in excise taxes should, according to the Ministry of Finance, compensate for the constantly growing expenses of the treasury (including for social benefits). As Kudrin noted at the end of April, “the financial capabilities of the budget system, including tax opportunities and insurance contributions, are now exhausted.” According to the Minister of Finance, the level of budget expenditures, including the Pension Fund, has today increased to 8.8 percent of GDP, which exceeds the average level for developed countries.

In the fall of 2010, Kudrin even stated that excise taxes on cigarettes and vodka were being increased by the Ministry of Finance not only to enrich the budget, but also to enable consumers of these goods to feel their importance in solving the country’s social problems. “So that people feel: whoever drinks vodka, whoever smokes, will contribute more to help the state. If you smoked a pack of cigarettes, it means that you contributed more funds to solve social problems: supporting demographics, developing other social services, supporting the birth rate,” explained . Kudrin

At the same time, an increase in the “harmful habit levy” in the form in which the Ministry of Finance proposed it in March should have led to a sharp increase in prices for alcoholic beverages and tobacco products. As the Kommersant newspaper wrote , market participants calculated that in three years, due to new excise tax rates, a pack of cigarettes in Russia will cost at least 95 rubles, and legal vodka will cost at least 390 rubles per half liter.

The government was quick to respond to the Ministry of Finance’s proposal. In particular, Deputy Prime Minister Viktor Zubkov expressed concern that an increase in excise taxes on alcohol will lead to an increase in the share of illegal products on the market. And Prime Minister Vladimir Putin stated unequivocally: “We cannot remove the burden from business and shift it onto the shoulders of the ordinary citizen.”

In Russia, both businessmen (for example, representing oil companies ) and officials listen carefully to Putin’s words. On April 22, Reuters, citing a source in the Ministry of Finance, reported that excise taxes on tobacco will increase by an average of 40-42 percent per year. And on the evening of April 25, Kudrin said that the increase in excise taxes on tobacco and alcohol in the coming years will be about 25-30 percent, not failing to note that even in this case, “they will still remain lower than in the West.”

Later, Kudrin’s words were finally clarified by his deputy Sergei Shatalov . It is planned to increase the excise tax on alcohol by 25-30 percent, and on tobacco products by 40-42 percent. Now the Ministry of Finance plans to increase the excise tax on alcohol to 500 rubles per liter by 2014, and on tobacco products to 770 rubles per thousand cigarettes.

newspaper The Vedomosti cited calculations by the chairman of the board of the Union of Alcohol Producers (which includes Russian Alcohol, Synergy, Ladoga and other companies) Dmitry Dobrov. He believes that an increase in alcohol excise tax to 500 rubles (from the current 231) will lead to an increase in the price of a half-liter bottle of vodka from 110-120 to 240-260 rubles. It is clear that cigarettes will also rise in price, albeit not as much as the Ministry of Finance expected: according to BBC Russian calculations, by 2014 an average pack will cost 38.5 rubles, not 95 rubles.

The government has not yet approved final figures on the growth rate of excise taxes. It is also not yet clear whether the increase will be of any use. For example, Rossiyskaya Gazeta recalled audit data from the Accounts Chamber, showing that since 2007, rising alcohol prices have led to a decrease in budget revenues. For example, in 2007, the budget received 8.2 billion rubles in excise taxes on alcohol, in 2008 - 5.8 billion, and in 2009 - even less, namely 4.3 billion rubles.

Irina Ryabova

Hold your horses

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