The Russian Ministry of Finance has temporarily abandoned the idea to introduce excise taxes on sugary drinks, including soda, juices and sweet yoghurt, the newspaper “Izvestia” , citing a source close to the government.

Officials came to the conclusion that such a measure may painfully hit the industry during the crisis, as in the framework of the Customs Union is cheap drinks will come from other countries. The health Ministry, however, continues to believe that the excise tax required to protect the health of citizens.

However, as said the source, rejecting the idea of temporary, and after a year or two to this topic can be revisited, as it is common international practice and budgetary need.”

The official representative of the Ministry of Finance confirmed that the draft three-year budget the introduction of excise duty on sugary drinks is not laid.

That the Ministry of Finance is considering the possibility of imposing excise tax on sugary drinks, it became known in the beginning of the year. Then the Minister of Finance Anton Siluanov has explained that this measure has two purposes – raising revenue and reducing consumption of “bad” foods.

Later the justification for the imposition of excise tax on sweet beverages (five cents per liter), designed to increase revenues, found in the materials for the meeting about additional revenues in 2017-2019, which was held at the Vice-Premier Igor Shuvalov at the end of August.

About the negative economic consequences of the introduction of excise duty has warned the Commissioner for the protection of the rights of entrepreneurs Boris Titov, the newspaper reminds.

In an official letter to Prime Minister Dmitry Medvedev, he wrote that production of soft drinks is low-margin and now because of the crisis, most companies in the industry works on the face or below the level of profitability, and the introduction of additional tax burden will cause a corresponding increase in prices and, as a consequence, a further reduction of the market and the closure of a number of companies.

President of the Union of manufacturers of soft drinks and mineral waters Dmitry Petrov also believes that the new excise tax would lead to serious negative consequences for the industry. In his opinion, would suffer up to 50% of the companies.

“Proposed by the Ministry of Finance excise tax of five cents per liter could lead to an increase in prices by 10-25%. The price increase of 10% leads to a decrease in demand by 15%. In the end we would get a decline in sales not less than one-third that poses serious problems for the industry,” warns the expert.

Izvestia: the Finance Ministry decided to introduce excise duty on sugary drinks 27.09.2016

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