A normal-sized bottle of whisky (70cl) will cost an average 45c more following the 13 per cent increase on spirits announced in the Budget, the representative of wholesalers and retailers has calculated.
The 1c increase on every 25cl of beer would translate into a four per cent increase in cost per foreign bottle and about two per cent on its local counterpart, said Philip Fenech, president of the tourism, hospitality and leisure section of the Chamber of Small and Medium Enterprises – GRTU.
While consumers can expect to pay more for their regular pint with immediate effect, leading manufacturer and importer, Farsons Group, has estimated its total increase in excise payable will amount to well over €1 million.
But the industry is not just concerned about the change to the excise duty on alcohol; the cumulative effect that the rise has in conjunction with other measures announced on Monday has to be taken into account.
For instance, excise duty on fuel was increased by 3c a litre in Budget 2011 and this would affect distribution and local production, Mr Fenech said
He referred to the 2009 Budget, when excise duty on alcohol was reduced to counteract the rising number of illicitly imported spirits from abroad, mainly Sicily, and questioned whether, in increasing it again, the situation would revert to what it was before it had been fixed and legitimate traders started registering a boost in their sales.
The higher duty could result in unfair competition, with those who did things illegally competing with those who worked within the system, he said.
Overall, alcohol in Malta was cheaper than in other countries, Mr Fenech said, comparing the maximum spend, €2.50, on a shot and a mixer at a local entertainment outlet to Ireland and Greece, where it could cost up to €7.50. “This has always been something tourists saw as an advantage – a special feature – so could raising prices do away with that?
“We were on the road to recovery and the Budget was positive in terms of tourism, especially from the product development point of view, but, suddenly, we have these challenges ahead, when we should be more sensitive to be more competitive,” he said.
Farsons Group said prices for local and imported beer, with immediate effect, would vary between 1.50 and 5.50 per cent for local and imported beer.
Beer excise duty is calculated per hectolitre per degree plato (a measure of specific gravity), meaning different brands will be affected at different rates, according to their alcohol content.
“Enforcement of these indirect taxes is imperative to ensure a level playing field and illicit trading has to be seriously controlled,” a group spokesman said, adding it had several issues on this matter in recent years, which led to unfair competition.
The concern was also high on the agenda of The Sense Group, a lobby group of producers and importers of the alcohol industry, which disapproved of the increase and felt it did not make sense only a year after excise duty was reduced to fight illegal importation. It described the increase as “a desperate measure and a blow to legitimate businesses, enacted without any form of consultation”.
TSG estimated that the rise in excise duty on beer would amount to a 100-per-cent increase.
The revenue from these measures would be directed to the health bill and their aim was to encourage healthier lifestyles, Finance Minister Tonio Fenech said in his Budget speech.
The increases were welcomed by Aġenzija Sedqa. “Research shows a relationship between the price and consumption of alcohol. The increase in its cost normally makes it less accessible, depending on the disposable income of the individual,” it said.
However, even though positive, the increase in the price of alcohol would not be so effective in cases of persons with an abuse problem, who would still need professional help to overcome their addiction, the agency said.
It suggested that part of the duty collected should be channelled directly into programmes for people with alcohol-related problems.
TSG, however, insisted that increasing the price of any alcoholic product would not address issues of abuse and would only penalise the average consumer, who used such products responsibly, without threatening health.
“Moreover, there is no scientific proof that drinking beer and spirits in moderation is harmful to health and the minister’s excuse that revenue from this measure will go towards strengthening the health sector is, to say the least, a very lame one,” the group maintained.