Council: Drop excise rate

The National Business

By DALE LUMA
THE PNG Manufacturers Council, in a proposal to the Department of Treasury, wants amendments done to reduce the excise rates of alcohol beverages, and increase the penalties for non-compliance.
Chief executive officer Chey Scovell in a letter to Treasury secretary Dairi Vele said it would also address the epidemic abuse of ready-made and illicit alcohol products and its negative impacts.
“PNG’s fiscal regime of continual excise increases, far more than inflation, has had the unintended consequence of driving demand to low-cost high-alcohol products such as ready-to-drink and illicit products,” Scovell said.
The proposed changes to the rates for beer made from malt include:

  • BEER or mixed drinks containing beer, not more than three per cent alcohol by volume (up to five per cent alcohol by volume) from 88.96 down to 66.72;
  • BEER or mixed drinks containing beer, more than three per cent and not more than five per cent alcohol by volume (up to five per cent alcohol by volume) from 114.80 down to 91.84;
  • BEER or mixed drinks containing beer, more than five per cent and not more than seven per cent alcohol by volume (up to seven per cent alcohol by volume) from 130.80 to 104.64;
  • BEER or mixed drinks containing beer, more than seven per cent alcohol by volume from 151.89 down to 121.89.

“We acknowledge the negative impacts resulting from the endemic abuse of manufactured ready-to-drink (RTD) alcoholic products and illicit alcohol products,” Scovell said.
“As identified in studies, such as the recent study on our illicit tobacco market, Papua New Guinea’s fiscal regime of continual excise increases, far more than inflation, has had the unintended consequence of driving demand to low-cost high-alcohol products such as RTD’s and illicit products.
“The State has lost control of the marketplace.
“In every direction legal manufactures and trading businesses are experiencing their worst trading times, primarily due to the rise of competitors who simply do not operate legally,” Scovell said.
“We note that the state makes the lions’ share of earnings on excisable products such as beer and tobacco.
“We stand firm in our assumptions that acceptance of our recommendations shall provide for increased revenues to the State – not less.
“Similarly, to our calls to halt excise increases on tobacco products, we recommend that the rates applied to beer product is also frozen for three years allowing sufficient time for consumers to revert back to legal products, enforcement to improve, and hopefully the cost of doing business to reduce and a taxation regime that is conducive to consumer spending and investment is put in place.
“Further to these changes in the applied rates of excise, the penalties for non-compliance needs to be improved.”
The council recommends:

  • FOR mislabeling of products and false claims (for instance claiming the alcohol content to be 10 per cent above when is 15 per cent above);
  • WHERE the claimed, displayed or reported alcohol content by volume is more than 0.5 per cent higher than the claim;
  • A FINE in the greater amount of K10 million or 20 per cent or the company’s total turnover, and
  • IMPRISONMENT of not less than two years and not more than five years, for the company’s’ directors and head of business.