The European Union now goes after beer

The European Union is cracking down on alcohol consumption. The newest idea: changing tax policy to incentivize the brewing of beers that are lower in alcohol percentage. This change will hurt craft breweries.

The proposal

The European Commission has proposed making  a change on beer excise duties in the EU. As of now, lower-strength beer benefits from a reduced tax rate, provided it has less than 2.8 percent alcohol. In a press release, the EU’s executive branch claims that by increasing that rate to 3.5, more producers would benefit from reduced rates, and would therefore be incentivised to produce lower-percentage beers. It explicitly states : “to provide an incentive for brewers to be innovative and create new products.” The interest here is not to give some brewers a tax break, but to change the supply on the marketplace.

Not to be misunderstood: tax breaks are great, no matter where they occur, and by any standard, it is better for the EU to reduce taxes on the bottom half than to increase it on the other. However, let’s just look at the underlying logic the European Union wants to pursue here.

According to lawmakers (in the European Union the Commission is the lawmaker, and not the parliamentarians), lower percentage alcohol is  better for consumers than higher percentages; therefore, lower percentages need to be encouraged. By the same logic, you could equally make the case that reducing beer tax altogether prevents a larger consumption of vodka, and that lowering vodka duties would reduce the consumption of 80 per cent Austrian Stroh rum. The equation goes on from there.

But even more importantly, beer up to 3.5 percent is hardly tasty beer, let alone if it is even beer. Before anyone takes offence, note that even the American Bud Light has an ABV of 4.2 per cent (craft beer enthusiasts will probably have their own opinion about the said beer). Beer with an ABV this low is technically beer, but it doesn’t taste like it. Much like sipping on a lemonade, the experience is disappointing and unfulfilling if you expected to get an actual alcoholic drink. The craft beer scene will suffer from it.

Health craze

The European Union is attempting to follow the recommendations of the World Health Organization (WHO), which reiterated this month its urgent call for increased taxes on alcohol. The WHO has made non-communicable diseases (NCDs) a priority in its actions, and continuously holds panels with billionaire philanthropist Michael Bloomberg, the king of the Nanny State. With new outbreaks of Ebola in Africa, you’d think that the World Health Organization would find more urgent topics that it could address. This is particularly true since increased taxation on alcohol, as advocated by the WHO, doesn’t actually work. The empirical evidence supports this as the heaviest drinkers’ responsiveness to price changes was statistically indistinguishable from zero. Even more recent studies find that hazardous and harmful drinkers (people who consume more than 17.5 units per week) had a very low response to price changes.

The European Union doesn’t even have to argue for a tax increase and can focus on reshaping the market, because its member states have already been responsible for taxation  for a long time. Beer makes up 32 percent of the European beverage market, yet contributes 45 percent of tax collected. Countries like Sweden, Denmark, Croatia or Hungary practice sales taxes on beer of 25 percent or  more.

The recent renaissance of breweries seems to have happened in spite of  government interference. Out of 8,500 breweries in Europe, 1,000 were launched in the past year alone. This has resulted in  more local jobs and support for local farmers, which you’d think would be the objective of the European Union. But far from it: the EU is looking for a world in which your beer is not only expensive, but also tasteless

Beer is freedom

To say it in the words of Matt Kibbe: beer is freedom!

Craft beer has made the beer landscape wonderfully interesting. Many people have moved from beer drinkers to beer tasters, and while that may cause them to drink beers with  a higher percentage, it certainly hasn’t put them at greater risk. And yes, there will be those who buy the cheapest beer with the highest alcohol percentage. We should recognise that they will always exist, and that if we take their beer away, they will just find a different means of procuring their buzz.

Don’t blame it on the beer.

This article was first published by Values4Europe.

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About Bill Wirtz

My name is Bill, I'm from Luxembourg and I write about the virtues of a free society. I favour individual and economic freedom and I believe in the capabilities people can develop when they have to take their own responsibilities.

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