Minister for Rural Development, Vaggelis Apostolou, shocked local authorities and professional groups of Tyrnavos when he told them last Friday that the government is considering to impose a 6-euro tax on tsipouro, the strong distilled grape pomace brandy for which Tyrnavos in Central Greece is famous.
Apostolou argued that that the tax raise from €0.55 to €6 per liter is an “equivalent revenue measure” as the government has long expressed its intention to abolish the special tax on wine.
“Consumers’ health and tax evasion through tsipouro sold in bulk are our main concerns,” the minister claimed trying to justify the unbelievable tax that will make tsipouro more expensive than whiskey, vodka and other ‘hard’ alcoholic beverages.
Such a tax is a big blow to the industry and every liter of bottled tsipouro that will leave the area will bring down the consumption.
Tsipouro-makers fear that the extraordinary high taxation will violently crash the export efforts that have begun to bear fruits in recent years.
The 6-euro tax will exclude bottled tsipouro from the competition with other alcoholic beverages which are chemicals and not form grape distillation, locals say. Many grape-growers believe that behind the tax on wine imposed as of November 2015 and the even tougher tax on tsipouro are the interests of hard alcoholic beverages multinational companies.
The news has alerted the 230,000 winegrowers in the country, who now think that since they now think that traders will demand an even bigger decrease in grape prices in order to cover the gap from high taxes.
Ofcourse, the special tax will not be imposed only on tsipouro form Tyrnavos but most likely will affect other hard and clear distilled brandies like tsikoudia and raki.
Wine tax backfired
The idea of a 6-euro tax on tsipouro came while consumers, winemakers and traders were in fact have been awaiting that the government abolishes the special tax one wine.
In January, Minister Apostolou told wine-makers the government was considering to abolish the special tax on wine that was imposed “under tremendous pressure” [by the country’s creditors] and “has not yielded the expected revenues.” The abolish would come after conclusion of the third review of the Greek fiscal adjustment program, he had said. Apostolou had promised scrapping of the special wine tax also in August 2017.
The special tax on wine was supposed to bring €100 million in revenues for the state.
The original proposal was that the extra tax would be 0.20-0.30 euro liter bottle, regardless of whether Greek or foreign wine.
Ultimately, the tax was 0.20 euro, some extra fees were added, a drop of tax here and a drop of fee there, the retail price reached quickly reached additional 2 euros per wine bottle for the consumer – although the average bottle is 700ml and not even one liter. In the magic world of Greek commerce, prices for average table wine of not worth mentioning quality ended up to be sold at €6.90 per bottle in the supermarket – from €4.90 before the special tax was imposed.
The special consumption tax on wine not only did not increase state revenues but it literally backfired. It increased illegal trade in wine and grapes for wine making.
In 2016, the state collected less than 24 million euros from the special wine tax.
In August 2017, Finance Ministry sources told media, that the special consumption tax on wine caused more damage to the sector of wine producers than it brought revenues to the state.
And the revenues problem will be solved by imposing a 6-euro tax per liter of tsipouro? and why the €0.20 wine tax will be replaced by a tax which is xxxxx% more? Because, also other special taxes imposed on gambling, on coffee and other goods and services backfired, as the Greeks simply turned their backs?
EU Commission behind the tax on tsipouro
Minister Apostolou tried to justify the absurd tax on tsipouro saying that it the the European Commission urging Greece to comply with EU price standards regarding ethyl alcohol. Speaking to Skai TV on Tuesday, the minister said the EC has taken Greece to European Court for this issue. “We want us to sell it at 24 euro per liter as in the rest of Europe,” he said.
I don’t know what the EU, the Commission and the Minister claim to claim, but spirits with 38%-40% alcohol (tsipouro 40%-45% alcohol) like Apple Schnaps in Germany or Aquavit in Scandinavian countries have not fixed prices, although alcoholic drinks are overcharged in Scandinavia, yet for other reasons. A liter of good quality Germany Schnaps is to have around 10 euros, a French eau de vie Williams Pear at 20 euros.
PS This is more than just a bad joke in the country we call Greek Absurdistan.