Food producers have warned of possible price increases

Food and beverage producers are protesting against a sharp increase in environmental tax rates starting in 2019, Kommersant has learned . The increase will lead to an increase in consumer prices of at least 1%, they warn.

Details

• The Ministry of Natural Resources proposes to increase environmental tax rates significantly from January 1, 2019 - for example, for aluminum metal packaging from 2,423 thousand to 20 thousand rubles per ton and for polymer packaging - from 3,844 thousand to 10,432 thousand rubles per ton. Now representatives of the food industry pay about 100–200 million rubles in environmental fees per year, a source in a large company told the publication; after an increase, the amount of the fee could increase to 500 million rubles, and this will cause an increase in food prices by at least 0.5–1%, notes source. Executive Director of the Union of Brewers Vyacheslav Mamontov also pointed out the rise in food prices in his letter to Dmitry Medvedev (Kommersant has a copy of the letter). The National Union of Milk Producers and the RusPack association (which unites Coca-Cola, PepsiCo, Procter & Gamble, Tetra Pak) also opposed the initiative of the Ministry of Natural Resources.
• A mandatory fee for manufacturers of environmentally harmful goods and packaging (a full list of such goods is here ) was introduced in 2017. It is assumed that their producers must either independently ensure partial recycling of their waste, or pay a fee for their disposal.
• The brewers are asking, instead of a one-time rate increase in 2019, to gradually increase the fee “on the most sensitive items for business over three years,” follows from Mamontov’s letter. Earlier, the Rusbrand Association (which unites the largest manufacturers of consumer goods) made the same proposal, noting that increasing the eco-fee on aluminum packaging is illogical against the backdrop of support for Oleg Deripaska, who was sanctioned by Rusal, since companies can opt for cheaper packaging instead of aluminum cans . And milk producers propose to index the eco-tax for 2019.
• The Ministry of Finance has an alternative proposal - not to raise rates, but to replace the environmental tax with a similar tax from 2020. This should increase its collection rate - the liability for non-payment of tax is much higher than for non-payment of the fee. But the Russian Union of Industrialists and Entrepreneurs (RSPP) opposed this bill.
• Industry representatives also complain about the non-transparent pricing of the industry (transportation costs vary by region from 833 to 3.575 thousand rubles per ton, and disposal costs from 7.6 thousand to 65.15 thousand rubles per ton) and the process of developing new rates - for example , the government first brought the project up for discussion and only then began to look for a rate developer.

Context

• Most goods and services in Russia will become more expensive in 2019 due to the increase in VAT from 18 to 20%, which comes into force on January 1. In connection with this, tariffs for housing and communal services will increase more than usual - in September the government approved a scheme to increase them in two stages by 4.1%. Private business will also raise prices along with VAT - according to surveys , 80% of large Russian companies plan to do this. For example, clothing retailers, whose business is complicated by fluctuations in the ruble exchange rate, are going to increase prices by 5–10% in the budget segment and 10–20% in the premium segment.
• In anticipation of the VAT increase, the price of some consumer goods -bread and sugar - has already increased in price. In addition, oil companies want to increase gasoline prices from the new year by 4-5 rubles per liter at retail.

It is unlikely that we should expect increased consumer activity against the backdrop of rising prices for goods and services. People will be more careful in their consumption

Liana Faizova