ey walter de wit - financial effects of excise duties on beer in border trade
TRANSCRIPT
Financial effects of excise duties on beer in border trade in the Nordics
Walter de Wit
Partner, Ernst & Young, Amsterdam
15 April 2023 [Presentation title]
Introduction
Report “Economic effects of high excise duties on beer” by Ernst & Young and Regioplan Policy Research;
Research aimed at: Consequences of cross border shopping of beer; Consequences of high(er) excise duty rates on beer;
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15 April 2023 [Presentation title]
Excise duty rates per hectolitre of beer in Euros (12 degrees Plato, 4.8% alcohol) in the EU Member States and Norway on 1 July 2014.
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NO FI UK SE IE SI DK NL FR IT EL EE CY CR HU AT PL BE MT PT SK LV CZ LT ES RO LU DE BG
01-Jul-14
EU Minimum rate
15 April 2023 [Presentation title]
Cross border shopping of beer in the Nordics
As a result of large differences in excise duty rates on beer between the Nordic countries and neighbouring countries, many Nordic consumers purchase beer abroad;
A total of 52.7% of Nordic beer consumers bought beer outside the national borders between June 2013 and June 2014;
328.4 million litres of beer (worth 1.0 billion euros) bought outside national borders annually;
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Financial loss resulting from cross border shopping Nordics, total
The loss of VAT and excise duty revenues arising directly from cross-border shopping for beer amounts to approximately 545 million Euros in the Nordic countries (figures for legal purchases);
Estimated that Nordic consumers spend approximately 2.0 billion Euros in total on other products when they travel abroad to buy beer, resulting in a total loss of 512 million euros in VAT revenue;
More losses through lower revenue of income tax and social security;
Total loss approximately 1,1 billion Euros.
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Financial loss resulting from cross border shopping in Finland
Loss of excise duty revenue: 110 million Euros Loss of VAT revenue: 54 million Euros
Total direct revenue loss: 164 million Euros
Figures for legal purchases!
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Other consequences of cross border shopping
In the Nordics 2,590 less beer-related jobs in the retail sector; In Finland: 610 less jobs in retail;
But: retail is not the only sector affected by cross border shopping; Also in the brewing sector itself and its suppliers jobs are lost;
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15 April 2023 [Presentation title]
Increase of excise duties do not lead to more government revenue
Although in most countries where excise duty rates have been increased excise duty revenue has increased with it, negative impact on employment associated with it an increase in excise duty significantly affect government revenue from income tax and social security contributions;
Increases in excise duty do not result in a proportionate increase in the total beer-generated government revenues. In 8 of the 17 countries where an excise increase took place, total beer-generated government revenues even decreased;
Increases in excise duty result in a reduction of beer-generated employment. In 15 of the 17 counties that increased the excise duty on beer, beer-generated employment decreased;
High excise duty rates lead to a decrease in beer sales as well as increased cross-border sales. Both have a negative impact on employment and government revenues.
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15 April 2023 [Presentation title]
Changes in total beer-generated government revenues in those EU Member States (plus Norway) where the excise duty on beer increased (2008-2012)
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Thank you