Breweries link up in tax protest

LOCAL breweries are refusing to pay the Government's new alcohol duty rates, prompting top level meetings between San Miguel and Carlsberg bosses and Financial Secretary Sir Hamish Macleod.

The meetings took place after it became clear the breweries were disputing the way the Government calculated the new tax, which was announced by Sir Hamish in this year's Budget.

Last night the Government said the local breweries' method of calculation was inaccurate but consistent with each other, suggesting they may be trying to jointly take on the Government.

The breweries' interpretation of the new system of alcohol tax collection is costing the Government hundreds of thousands of dollars in revenue.

Principal Assistant Secretary for the Treasury, Jessie Ting Yin-mei, said the meetings were to try to resolve the breweries' ''inaccurate'' interpretation of the new system introduced to simplify alcohol duty rates.

''It is a question of interpreting the law,'' she said.

''[The breweries] have come up with an interpretation different to ours, which is, in our opinion, inaccurate.

''They have chosen to come up with the wrong interpretation of the law and despite several meetings this interpretation has not reflected what has been discussed.'' When asked if the breweries were acting together she said: ''On occasion - when it suits their purposes.'' The new system was implemented on March 2 under temporary measures contained in the Public Revenue Protection (Dutiable Commodities) Order 1994, following the budget announcement. It should be made permanent in an amendment to the Dutiable Commodities Ordinance soon to be tabled before the Legislative Council.

It aims to simplify the collection of duty by changing it from a flat rate plus a percentage increase in seven categories to a straight percentage basis with just three categories.

The Government claims that as far as beer is concerned, which accounts for 87.5 per cent of alcoholic drinks consumed in the territory, ''both imported and local products will enjoy a substantial duty reduction under the new system''.

But the Government's estimate of collectable duty has been undercut by the breweries' own interpretation of what should be taxed.

Mrs Ting said the local breweries were claiming tax reductions on distribution costs and other expenses to which they were not entitled, she said.

She said they were currently paying a ''tentative'' level of duty while talks continued.

She refused to comment on whether the dispute would eventually have to be settled by legal action.

But she said: ''The way taxable value is determined is defined in law. The breweries have declared a certain value to be what it considers the taxable value and the Government has asked them for more information.

''It is a technical process. We are going through it step by step. Now we have to sit down and consult the lawyers to see how the law might apply to the breweries.'' Carlsberg spokesman Derek Currie said last night that the breweries did not yet know what the duty rates were.

''We are paying a provisional duty but we don't know if that will be the final duty or not.

''We are having discussions with the Government because it appears that duty on exported beers is not as high as local beers.'' He said the only reason the breweries were talking jointly with the Government was so they could both find out how to interpret the new duty rates.

Mrs Ting also said that the breweries were failing to pass on the duty cuts to consumers and that prices had in fact increased since the budget. But she admitted she was unaware whether the increases were at wholesale or retail level.