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Belgian Brewers Challenge French Beer Tax Hike

by Ulrika Lomas, Tax-News.com, Brussels

24 July 2013


The Belgian Brewers' Federation has submitted an appeal to the European Commission, challenging the French Government's decision to raise the tax on beer by 160 percent at the beginning of the year. The Brewers of Europe association has followed suit.

The French Government increased the specific tax on beer by 22 cents per liter from January 1, 2013, within the framework of its 2013 social security finance law. The measure formed part of efforts to reduce excessive alcohol consumption, particularly among the young as a matter of priority.

At the time, the Government defended the provision, arguing that the existing tax rate was particularly low compared to rates applied in other European countries. The Government insisted that preventative action was therefore needed to ensure that it becomes financially more difficult in future to access alcoholic products.

Outraged by the decision, President of the Belgian Brewers' Federation Sven Gatz highlighted the fact that a light beer in France now costs ten times as much as a glass of wine. The tax hike is simply "discriminatory" and "anti-European," Gatz said. The Federation had previously warned of the impact of the tax rise on investment in the brewing sector and on employment, both directly and indirectly.

According to the French Brewers' Federation, beer in France is now 14 percent more expensive than in 2012. Production has fallen by 16.5 percent in the first half of 2013.

In December last year, following the adoption of the beer tax hike by French lawmakers, Pierre-Olivier Bergeron, Secretary General of The Brewers of Europe, lamented the fact that beer "has been singled out amongst the other alcoholic beverages – despite beer only representing 16 percent of the French drink market and per capita beer consumption in France already being the second lowest in the European Union."

Bergeron continued: "One of the few rays of light for the French beer sector during the economic crisis has been the growth in micro-breweries, but these small businesses will also be hit with a 160 percent hike. And as for any health arguments that have entered the debate, one only has to note that it is the lowest strength alcoholic beverage that is being singled out here and even non-alcoholic beers will be hit by the top rate of 160 percent."

Alluding to the fact that the measure will hit not just French brewers but all brewers exporting to France. Bergeron pointed out that 30 percent of French beer consumption is imported beer, coming mostly from Belgium, Germany, Netherlands and the UK.

He said: "Simply put this tax increase destroys the business model of many of these brewers and may indeed lead to a number of brewery closures."

Bergeron concluded: "The beer market in France is forecast to decline by up to 15 percent as a result of this measure and jobs in the 35,000 hospitality establishments in France would be particularly hard hit. With the tax expected to lead to a 25 to 40 cent increase in the price of a small beer, this will further accelerate the existing trend from café to home consumption, which has already contributed to the closure of 12,000 establishments since 2007."

TAGS: tax | small business | business | Belgium | Denmark | Netherlands | law | excise duty | tax rates | social security | France | Germany | Europe

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