Despite the 4% increase in the tax on alcohol and alcoholic beverages (IABA), there was a “decrease of 4.7 million euros in tax revenues” for the state in 2023 until August, the Secretary General of the National Association of Spirits Companies (ANEBE), reporting to the category of goods the organization represents.
The tax loss occurs in a year of high tourist dynamics in Portugal, with a relevant impact on the consumption of this type of drinks. For this reason, ANEBE opposes the measure provided for in the 2024 state budget proposal, which provides for an increase in the IABA by almost 10%, a situation that provoked criticism from several quarters, including the Portuguese Farmers’ Association (CAP) .
“If we are already down 4% this year, what will it be like for the year, with a contraction of the economy that we are already seeing this quarter?”, asks João Vargas, remembering all external factors. that affect the industry, such as the increase in raw materials, glass and the impact that the two wars have on the markets.
Although ANEBE asked not to increase the tax burden on the activity in 2024, the government decided to continue increasing the IABA. As the association’s general secretary explains: “we are talking about an increase of 15% in two years in the spirits category”.
João Vargas explains that in 2022 there was a mid-year budget. “The government has decided to increase this budget by 1%.” It was then decided in 2023 to increase the interest rate by 4%. “So we have 1% plus 4% and now, in this budget proposal [de 2024]we have another 10%”.
Faced with the numbers, the leader does not hesitate. ‘I can say with certainty that the government will not reach that 39 million euros [de receita prevista na proposta de Orçamento]. We are responsible for 11% of the consumption of alcoholic liquids in Portugal and we do not expect that there will be 22% of the consumption this year”, taking into account that the national population is approximately 10 million people.
Brewers also against it
On the side of the Portuguese Brewers Association, the IABA increase is considered “unfair”. This is because “it does not apply to 61% of the alcohol consumed by the Portuguese”. “This 10% increase in the so-called alcohol tax will, as a result, severely punish the national brewing industry and its national value chain, namely national agricultural production of barley and national glass production,” he said.
Therefore, the association believes that the government measure, in a context of economic slowdown, “will have a negative impact on the entire beer sector, endangering the sustainability of hundreds of micro-enterprises and economic and social actors in the value chain – the main engines of development and advancement.” innovation of the industry.”
As he explains, the beer market grew by “double digits” in 2022, eventually recovering the volume it lost during the pandemic. However, brewers, like ANEBE, remember the increase in the costs of raw materials, glass and energy. The impact has been palpable and – says the association – several craft businesses have already closed, while the majority are struggling to stay on the market. “This tax increase is disastrous for these companies. IABA could weigh up to 1/3rd on their operating results.”
The end of this year is uncertain, especially because “it is beginning to notice that Portuguese households are reluctant to consume”, a fact that the Brewers Association attributes to inflation and especially to the rise in interest rates. On the other hand, according to the Brewers, the increase in the IABA will “once again” harm the competitiveness of national companies compared to Spanish companies, since in the neighboring country the tax corresponding to the IABA has not been increased for several years. years..
ANEBE’s João Vargas agrees, adding that several European countries have not increased taxes on alcohol and alcoholic beverages. “Portugal is a country outside the European reality. The difference between Portugal and Spain is 42%. Our tax, with what is projected in this budget plan, will amount to 1602 euros per hectoliter. In Spain that is 952 euros per hectoliter,” he explains. “In other words, a small business in Reguengos pays because it is 10 kilometers from the border. On the other hand, it would pay about 40% less tax.”
CAP recalls that “the Portuguese liqueur wine market needs support, not punishments”, and that “at the origin of these drinks are producers who contribute to the population and social cohesion of territories” and who promote tourism and the economy . Similarly, farmers believe that maintaining the tax on wine in restaurants at a rate of 23% takes away from the competitiveness of the Portuguese wine sector, and they propose a reduction to 13%.
On the side of the Federation of Portuguese Agro-Food Industries (FIPA), the president of the organization states that “political decision-makers have once again chosen to increase the IEC by 10% for refreshing drinks and alcoholic drinks, with the main focus on beer”. “Portugal is therefore one of the countries where these sectors are most disadvantaged by the IABA, being among the highest, if not the highest, in Europe,” complains Jorge Henrique.
Source: DN
