Booze to be taxed according to alcohol content, says report

Alcoholic beverages will now be taxed according to their alcohol level, The Star Online reports today. The beverages will now be taxed based on the alcohol value per litre of each product, meaning that those with higher alcohol content will be more expensive while those less than 5% will be cheaper. The revise in excise duty for alcoholic beverages, the first in 10 years, came into effect on March 1, the report said, adding that it would lead to further cut in profits for coffee shop and bar owners serving alcoholic drinks. Some in the industry, the report said, were confused over the new tax system while others said, the price hike would be low enough for them to absorb. The Star Online quoted Alcohol Consumer Rights Group Malaysia founder Deepak Gill as saying that the price hike would be "easy to absorb" for businesses, with not much impact on the consumer or seller. "From what I see, it hasn't really gone up that much. In fact, for a couple of items, the price has gone down," he said. However, he said Malaysia's taxes on alcohol were still "disproportionately high" and have caused such beverages to be seen as a luxury. Malaysia's excise duty on alcoholic drinks is reportedly the second highest in Asia and third highest in the world. Connexion Group chief executive officer Kent Chua, who manages the Beer Factory, was quoted as saying he needed to think about how to strike a balance between keeping his customers happy and staying profitable. "The hike is on lagers, that is Tiger beer, which accounts for 60% of our beer volume. So that hike is significant because our margin has already been thinning across the years amid rising business costs. "We foresee challenging times ahead because the increase will further strain our already narrow margins. We will have to see to what extent we can absorb it," he told The Star Online. Guinness Anchor Bhd managing director Hans Essaadi told the news portal that he was concerned that the latest development would increase demand for illegal alcoholic drinks. "The state of the economy is having a significant impact on businesses and consumers, and this will make it more challenging for our industry," he was quoted as saying. The report also said the new tax structure would affect the spirits and wines industry but not so much the beer industry. A Moet Hennessy Diageo (MHD) Malaysia spokesperson said there would be no immediate change in prices for their products, including Johnnie Walker whiskies, Hennessy cognac and Moet & Chandon champagne. A spokesman for a local distributor said not all spirits and wines would be affected. He said entry-level products would likely see an increase in cost but premium products should either become cheaper or stay the same. "For instance, wines below RM100 will probably increase in price while wines costing more than that will not. The same goes for spirits. Another distributor said he was worried that the new excise structure would affect the availability of lower-priced, entry-level wines. He said distributors might be discouraged from bringing in low-end wines, such as those that cost less than RM40, and concentrate on products in the middle and high ranges. "So in future, the cheapest wine you are able to get may be a mid-range one that is RM40 and more," he told the news portal. – March 3, 2016.]]>