site.btaAlcohol Industry Organizations Call against Higher Excise Duty Proposed by Finance Ministry

According to an open letter signed by the Association of Producers, Importers and Traders of Spirit Drinks and the National Vine and Wine Chamber and released on Monday, raising the excise duty on alcoholic beverages would increase illegal production, which currently accounts for nearly 50% of the alcohol consumed in Bulgaria. The letter comes in light of the Finance Ministry's proposed revenue measures for the 2025 budget, which include an increase in excise duty on alcohol and alcoholic beverages.

The two organizations are concerned over the Ministry's intention to increase excise rates on alcoholic beverages by 10 to 15% from 2025 and oppose a measure of this magnitude being introduced without thorough analysis and open dialogue with the affected stakeholders. They suggest that the potential impact on consumers, the business environment, the risk to public health and government revenues should be analyzed.

The organizations said that amendments to tax legislation just days before the start of their implementation, in the absence of dialogue with industry representatives, imposes a sense of uncertainty and unpredictability that can have severe consequences for both the industry and the state budget. 

The industry organizations believe that an increase in excise duties would lead to an increase in final prices, which would push the final consumer towards illegal products and distribution channels.

The organizations state that the industry, currently employing nearly 350,000 workers, is already facing significant challenges such as higher commodity prices, labour and energy costs. It warns that adopting such a measure would lead to job cuts and the closure of small and medium-sized enterprises.

The letter reads: "Our estimate shows that if the proposed excise duty increase is implemented, it will lead to a double-digit percentage decline in legal alcohol sales. This would mean a reduction of more than BGN 30 million in excise revenue and a further reduction of BGN 30 million in VAT revenue to the state budget."