As the autumn chill diminishes the nation’s thirst for beer and the search begins for something else to drink, imbibers should keep in mind that a bottle of premium brandy will now be a bit more affordable.
The first stage of Japan’s liquor tax revisions as mandated by the World Trade Organization takes effect Sept. 30.
The WTO ruled last year that Japan’s liquor tax system discriminated against imports because the taxes levied on spirits, such as whiskey and brandy, were at least 3.9 times heavier than those for domestic “shochu” on a per degree of alcohol basis. Under international pressure, the government decided last December to raise the tax on shochu by a maximum 140 percent while cutting, in stages, the levy on whiskey by 58 percent by October 2001. Japan hopes to reduce the disparity between the prices over a period of five years.
For starters, beginning Sept. 30, a 1-liter bottle of whiskey with a 40 percent alcohol content will become roughly 431 yen cheaper, while on the other hand a liter of Grade A, or “kou” class, shochu with a 25 percent alcohol content will become about 46 yen more costly.
The difference will be reduced further in October next year, while the tax for Grade B, or “otsu” class, shochu faces another increase in October 2001 to give time to help domestic distillers cope with the raise.
Finance Ministry officials, however, made no guesses as to how the changes will affect tax revenues, noting that liquor often is selected based on personal preference rather than cost, and there is no calculating how many people might switch from their current favorite spirit.
Although the European Union, which first brought the case before the trade watchdog, gave the green light to Tokyo’s plan, the United States, another plaintiff, demanded faster implementation. WTO rules stipulate that measures to correct discriminatory practices should be in place within 15 months of the body’s decision, unless all parties concerned agree otherwise.
In February, a WTO arbitration panel set up at the behest of the U.S. said the corrective measures should be in place by February 1998, which in effect has become the de facto deadline for Tokyo to secure U.S. approval for its plan. However, working-level talks between Japan and the U.S. this summer proved fruitless.