After three years of decline, illegal trade in alcohol is on the increase, shows a research by the Lithuanian Free Market Institute (LFMI). According to LFMI, this year the shadow economy occupied 24% of the spirits market in Lithuania, representing an increase by two-percentage points since 2015.
Alcohol policies differ greatly by states. Among other things, the AVMSD sets minimum standards for television advertising, although Member States are given the possibility to apply stricter rules, as television is generally clearly confined to the territory of one state.
Tax rates are a political decision with fiscal impacts. And despite the fact that all voters are influenced by taxes, at least voters who have a strong opinion on the issue of excise duties (e.g. alcohol, tobacco, etc.) affect the election outcome.
To better understand the need for a change in policy, this article first provides a brief overview of the current legislation and its implementation in member states and then looks at how current proposals for new minimum rates were formed. Finally, it evaluates whether increasing taxes on alcohol is the best course of action.
It is absurd to think that regulation of the official market, no matter whether via taxes or production-cost increasing tools, could eliminate the black market.
Entrepreneurs producing alcohol are continuously seen as “les enfants terribles” of European economies, together with manufacturers of tobacco products and business subjects from oil industry.
Lithuanian Free Market Institute (LFMI) introduces a new periodical publication “Lithuanian Shadow Economy“. The publication provides data about shadow economy in Lithuania and more specific data and insights in alcohol, fuel and cigarette markets.