Soaring prices bring little cheer to tipplers

PUBLISHED : Thursday, 03 March, 1994, 12:00am
UPDATED : Thursday, 03 March, 1994, 12:00am

THE fizz went flat for members of the liquor industry yesterday after they worked out the effects of the change in alcohol duty.


Sir Hamish's restructuring of alcohol taxes meant that prices for most drinks - with the exception of the cheapest bottles - soared with Chinese wines almost doubling in price.


The system was changed from what Sir Hamish described as ''a confusing cocktail of specific and ad valorem levies'' to an ad valorem tax.


All liquor above 30 per cent alcohol content by volume now pays a 100 per cent duty; wine, champagne and sherry pay 90 per cent, and non-grape-based alcoholic drinks, including beer and cider, pay 30 per cent of their value at source.


Chairman of the Liquor and Provision Importers Association Claes Rydberg said that while welcoming the removal of a discriminatory tax system against liquor importers, the association opposed the fact that Sir Hamish had left taxes at a very high level for all but the cheaper drinks.


''The system now discriminates against higher quality drinks,'' he said, adding that the Budget would probably lead to losses in government revenue because fewer people could afford to drink.


A bottle of champagne bought from a French vineyard for $300 would previously have had a tax tag of about $140. Yesterday the duty was increased to $280.


Tax on a bottle of wine costing $100 from the vineyard increased after the Budget from about $45 to $90. Only the lower-cost brands will be cheaper, with, for example, duties on a table wine costing $20 at source falling from about $30 to $18.


A $300 75-centilitre bottle of cognac will now have a tax of $300, which is about $140 more than duties before the Budget.


Assistant food and beverage manager at the Grand Hyatt, John Nielsen, predicted that more people would turn to sparkling wines and that total bar takings at the champagne bar would drop.


''But I'm sure the jockeys and the racehorse owners will continue to order Dom Perignon, even if the price has been forced up. It's all a matter of image.'' Hardest hit yesterday were the manufacturers of Chinese rice wine, which is almost all above 30 per cent alcohol by volume. From about nine per cent of value, duty soared to 100 per cent, putting local liquor on an equal tax footing with imported brands.


Vice-chairman of the Hong Kong and Kowloon General Association of Liquor Dealers and Distillers, Chiu Yiu-nam, was astonished by the increase, although he said he could not comment on what would happen to the industry as a result.


He said that some buyers had anticipated Sir Hamish.


''They have been buying up large stocks of Chinese wine over the past few days. I think they must have guessed what was going to happen.'' Beer manufacturers were finding the new duties a confusing cocktail of calculations yesterday.


General manager of Carlsberg in Hong Kong, Flemming With-Seidelin, said he had been taken by surprise by the alteration in tax structure which meant that instead of being taxed at $3.36 a litre, beer would now be taxed at 30 per cent of value.


He said this would have little effect on the retail price of green label Carlsberg, although Special Brew would certainly become more expensive.


Representatives from Carlsberg and San Miguel would be sitting down today to discuss with the Government the finer details of the new system.