Medium-term approaches to excise taxation of alcoholic beverages in Russia (Union of Russian Brewers, March-May 2021)

In mid-March 2021, Gaidar Institute experts launched a project to develop medium-term approaches to excise taxation of alcoholic beverages in Russia under an agreement with the Union of Russian Brewers (URB).

The objective of the study is to determine approaches to establishing a socially and economically justified level of excise rates for beer, vodka and wine for the period up to 2024.

Main content of the study:

1.     Assessment of the 2020 crisis impact on the performance of the alcohol industry (including in comparison with other sub-sectors of the food industry).

2.     Analysis of the cumulative impacts of the 2017-2019 excise tax rate freeze on the alcohol industry (including related suppliers and retailers).

3.     Forecast of the main parameters of socio-economic development of Russia for the period up to 2024.

4.     Scenario modeling of changes in excise rates for the considered types of alcoholic beverages up to 2024 on the volume of industry production (with separation of the share of large businesses and SMEs):

·        Maintain the current excise regime (taxation according to the rates defined in the Tax Code of the Russian Federation, taking into account the inflation indexation for 2024).

·        Freeze excise rates on all types of alcoholic beverages at the 2021 level for the period of 2022-2024.

5.     Evaluation of the consequences of feasible scenarios of changes in excise taxation for the alcohol industry and related suppliers and sellers (distribution network) by forecasting indicators of changes in output (production volume), employment (average number of employees), taxes paid (including VAT and excise taxes).

6.     Assessment of the excise regulation impact on consumer health in Russia:

·        Analysis of the mortality rates dynamic for causes related to alcohol consumption and assessment of the informativeness of this indicator for the purposes of this research.

·        Development of an evaluation methodology based on a review of international and Russian studies.

·        Creation of a database on the determinants under study, according to the developed methodology, based on the data of the Russia Longitudinal Monitoring Survey - Higher School of Economics.

·        Evaluation of the excise tax influence on different types of alcohol on the consumers’ health.

The project was completed by May 15, 2021.