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Monday 23.07.2018 | Name days: Magda, Magone, Mērija
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Beer brewers: many will lose jobs because of increased excise tax on beer

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIf the Saeima supports the initiative on increasing excise tax on beer by 50% this Thursday, 27 July, the number of people employed in the beer industry will decrease 30%, which will especially impact residents of Latvia’s regions, according to Latvian Breweries Union.

At the same time, representatives of the union note that excise tax for beer has already grown 45% in the past three years, and this is because the process was gradual. The current proposal, on the other hand, could turn out fatal for many breweries.

«Actions of certain politicians are destructive because they put at risk the industry’s existence. Considering that the beer industry has been balancing on the border of profitability, largely because the decline of domestic consumption, a rapid rise of excise tax will basically force some breweries to lay off employees and others to consider their continued existence. This is indicated by our estimates, predictions and experience of other countries,» says Latvian Breweries Union CEO Peteris Linins.

Linins emphasizes that the fact that the Saeima has voted in favour of PET packaging restrictions following the initiative of deputy Paradnieks, means beer sales are expected to decline 20%. «If the parliament also approves the increase of excise tax, the decline will be even more dramatic.»

Linins previously said there are more than 40 breweries registered in Latvia. Most of those breweries are situated in Latvia’s regions, stimulating the economies there. «Unfortunately, this new policy forces puts breweries situated in regions with high unemployment levels at risk. On top of that, unreasonable excise tax increase would be a double strike against breweries, because the recent decision to prohibit 2 litre PET bottles basically means write-off of investments directed to the modernization of PET production line. This restriction will come into force in six months.»

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