The planned increase in excise tax rate on spirits by nearly 15 percent, as approved by the Slovak cabinet last week, may spur shopping tourism and expand illegal acquisition of spirits, the Slovak Agriculture and Food Chamber claims, as reported by the SITA newswire.
The chamber added that this step is non-systemic and will miss the aim of the Slovak government to boost state budget revenues. Illegal distillation of spirits has a long tradition in Slovakia and such an inappropriate tax rate hike will reduce demand for "legal" spirits, whereby trading in illegally distilled spirits will expand, the association of farmers stated, quoted by SITA.
The chamber sees a solution in tighter control of illegal distillation which could bring at least a 35 percent increase in state revenues from excise tax on spirits if the checks are efficient. The newly approved excise tax rate on spirits (€1,080 per hectolitre) has placed Slovakia in the top position among the surrounding countries of the Czech Republic, Austria and Hungary on prices of alcohol.
Consumer prices of spirits in Slovakia will be the highest compared with surrounding countries because of the high rates of the excise tax and the value added tax, which will induce shopping tourism, claims the chamber. The increase in the excise tax rate on spirits is still subject to approval by the Slovak parliament, SITA newswire wrote. SITA
Compiled by Zuzana Vilikovská from press reports
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