OREANDA-NEWS.  June 26, 2012. The Ministry of Finance (MoF) has said it recognizes that since the beginning of the year budget revenues from excises on liquors dropped as compared with an analogous period of 2011, but not because of changing a way of excise calculation (from 75% of its prime cost in 2011 to 30% +30 lei per liter of absolute alcohol in 2012).

Deputy Minister of Finance Victor Barbaneagra said the main reason of a drop in respective revenues is related to a minimum selling price of liquors that was raised to 75 lei from 36 lei/liter for wholesales and to 100 lei from 50 lei for retail sales this year.

“One will have to analyze the condition; and it can not be ruled out that the minimum selling price will go down”, Barbaneagra said.

According to the Deputy Minister, another reason of shrinkage in budget revenues from excises on alcoholic beverages is the adoption and implementation of the budgetary policies 2011 and 2012 in different time of the year (April 2011 and January 2012 respectively). “In the first quarter of 2011, large revenues were conditional on promoting the Fiscal Policy 2011, which led to the fact that economic agents imported and made large stocks of alcoholic beverages”, he said.
According to the specialist, the excise of 75% cost in 2011 was high for certain economic agents, so they began smuggling and hiding real revenues.

“In order to bring them back to the lawful field, we have changed the calculation formula. In such condition, even if an economic agent reduces the production prime cost per a bottle of an alcoholic beverage (that leads to a drop in the ad valorem tax that is 30% of the prime cost), it can not do it in case of a fixed rate (30 lei per liter of absolute alcohol)”, he said.

Concerning reducing excises on brandies and other expensive alcoholic beverages within the new calculation formula application, Barbaneagra said that excises dropped indeed, while the excise per liqueur remained the same or went up.

“However, the situation needs to be examined fully. If one looks at an average niche and the highest niche of prices (on brandies and liqueurs), [one may see that] the excise dropped in fact. But if we analyze the condition in the lower price niche (cheap alcoholic beverages, for example vodka), the excise here grew from 18 lei in 2011 to 21 lei in 2012. Main budget losses are related to the minimum selling price on cheap alcoholic beverage, whose share makes 70-80%”, he said.
According to the official, 2012 Budget revenues will be almost the same as in 2011. “If we really collected 204 million lei in the budget in 2011, then we projected to collect 200 million lei from liquor excises in 2012”, he said, adding that losses at taxation of expensive alcoholic beverages are compensated on account of cheap beverages.

The Deputy Minister said that budget revenues from excises on vodka, liqueurs, brandies and other alcoholic beverages made 49.6 million in the first five months of 2012.

At the same time, the National Tax Inspectorate said that in conformity with a report of tax payments to the budget in the first 5 months, namely from excises on vodka, liqueurs, brandies and other alcoholic beverages, the government got 27.39 million lei revenues against 53.22 million lei in the equivalent period of 2011.