OREANDA-NEWS. August 11, 2010. The government is proposing a hike in the spirits excise tax of about 10% for each of the next three years. Currently the tax is RUB210 per 1 liter of spirits. That will rise to RUB231 next year and then reach RUB280 by 2013, reported the press-centre of OTKRITIE Financial Corporation.

View: We did not expect the tax to increase at a fast rate such as was suggested by the Ministry of Finance. The excise tax increase per 0.5 liter bottle of vodka will be RUB4.2 in 2011, which is not significant, and should translate into about a 2-3 ruble increase in the retail price of vodka. We do not see this minor price increase impacting vodka sales volumes as consumption will be supported by personal income growth exceeding +5% YoY in nominal terms. The news should be neutral for CEDC and Synergy, since in the wake of PM Putin’s comments that there would not be a rapid rise in the tax, the market had anticipated this level of tax hike.