Government to booze on alcohol taxes

In a bid to boost the country’s problematic budget, Russia’s Finance Ministry is seeking a major hike in the tax on spirits.

Officials are masterminding a four-fold increase in the booze levy, rolled out gradually over the next four years so as to take the sting out.

“Higher alcohol, tobacco and property taxes will help us get an extra 1.9 trillion rubles ($67 billion),” the deputy finance minister, Sergey Shatalov, told the Vedomosti newspaper.

Higher taxes will inevitably lead to higher consumer prices. The ministry says that by 2014, a bottle of vodka will cost about $13. Now its price is around $3.

The idea behind the project, drafted in 2010, was inspired by the anti-alcohol campaign dating back to Soviet times.

The average salary in the USSR then was about 120 rubles, while vodka cost about 4 rubles, so an average worker could buy no more than 30 bottles of vodka form his salary – though in this case he would not have anything to eat!

“Vodka is no commodity. It shouldn’t be cheap,” said Shatalov. “Now a bottle of vodka costs 90 rubles and the average salary is about 20,000 rubles. Is the state trying to turn the country’s population into alcoholics?”

Alcohol producers forecast black markets will thrive all around the country, but anti-alcohol activists say these forecasts are nothing more than a manipulation.

“Alcohol and tobacco producers are always trying to threaten the authorities with illegal markets,” Darya Khalturina, from the Russian Coalition for Alcohol Control, told RT. “This tax will be enough to finance the police, the special services, and so on.”

Market specialists say that the campaign launched by the Finance Ministry is “sheer populism”.

“Russia’s alcohol prices are the world’s highest,” Vadim Drobiz, head of the Alcohol Market Research Center, was quoted as saying by the Vedomosti newspaper. “In the US, you can buy a bottle of a vodka-like drink for $2, but for some reason there’s been no “alcoholization of the population”. It’s the social factors the background, not the prices – that are to blame.”

Drobiz believes that the reform is the Finance Ministry’s attempt to score points in the eyes of Western institutions, such as the World Bank.

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