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Government might cut tax on beer but counter with hike on quasi-beer

JIJI

Beer prices might drop and near-beer might rise under a tax plan being considered by the government and the ruling bloc.

The changes might come during a review of tax rates set to kick off next month to prevent liquor tax revenues from falling further.

Japan hopes to wrap up tax system revisions for fiscal 2015 starting next April so they can be compiled at year’s end, but discussions are expected to be difficult because the decision will directly affect product prices.

Tax rates on beer and quasi-beer products are split into three categories, depending on malt content and production method.

A 350-ml can of beer carries a tax of ¥77, while beerlike products enjoy much lower rates, such ¥47 for “happoshu” low-malt drinks and ¥28 for “third segment” beverages, which are made from such ingredients as soybeans and peas instead of malt, or produced with the addition of spirits.

When consumption tanked after the bubble economy imploded in 1991, Japanese brewers launched cheap happoshu in the 1990s and even cheaper third-segment drinks in the 2000s to dodge the high tax on real beer, which is defined by the ingredients. The subsequent popularity of quasi-beer products, however, started eating into tax revenues — at least until the government started taxing the innovative new beverages.

Overall liquor tax revenue, including from alcoholic beverages other than beer and quasi-beer, came to ¥1.37 trillion in fiscal 2013, or just over 60 percent of the peak logged in fiscal 1994.

In July, Sapporo Breweries Ltd. relaunched its popular Goku Zero, previously classified as a third-segment beverage, as a new happoshu after tax authorities questioned whether it qualified as a third-segment quasi-beer.

Inside the ruling Liberal Democratic Party and its junior coalition partner, New Komeito, there are persistent calls for simplifying the liquor tax regime, perhaps by abolishing the new classification, to avoid confusion.

At the end of 2013, the two parties announced a plan to review tax rates on alcoholic beverages, with an eye on beer and beerlike products.

The industry has consistently called for a sizable cut in the tax on beer. Meanwhile, due to the differing levels of reliance on third-segment drinks among brewers, it will not be easy to reach a consensus on raising the rate on these products, an official from the Brewers Association of Japan said.

  • Stephen Kent

    How about making the tax on all beer the same (thereby eliminating the need to make chemical-laden “I can’t believe it’s not beer”) and offsetting this by raising the tax on cigarettes, then doing a bit of good old Shinzo Abe third arrow structural reform to break the stranglehold the cartel of the big three beer makers has over the market and open it up more to smaller producers around the country to help stimulate regional economies? That’s what I would do.