Tax evasion with spirits reaches over 60 percent of the market in 2010, says Garant

Tax evasion with alcohol and alcohol beverages has amounted to about EUR 700 -750 million in 2010 which counts for more than 70 percent of the local market, according to Romulus Dascalu, president of the Employers Organization of Alcohol and Alcoholic Beverages Industry (Garant).

Over the last years, tax evasion in the alcohol industry has increased constantly in direct relation with the hike of the excise duty from EUR 150 in 2003 to EUR 750 starting 2006, Dascalu told a press conference this week. This generated losses of about EUR 3.3 billion (EUR 4.5 billion with losses from VAT included) to the state budget, added Dascalu. According to him the authorities are very much aware of the current state of affairs and in many case they tolerate the situation.

“The last years’ economic context has fostered tax evasion and obscure companies while large manufacturers have lost ground. It is inadmissible for all sorts of illegal practices, such as selling spirits at a price that doesn’t even cover the excise duty by companies that have also caused their own insolvency, to be further tolerated,” he said.

Dascalu explained that while some of the tax evasion methods are the same as always others have been improved in the last couple of years. This includes partial registration either of the final products or raw materials, using fake excise stamps, fictitious exports, selling alcohol products which are falsely registered as cosmetics (after-shave and mouth-wash) alcohol-based antiseptics or industrial and technical alcohol as well as asking to enter insolvency in order to avoid having to pay various taxes. Garant’s president stressed out the fact that improving the law and making fiscal controls more efficient are crucial in order to protect the remaining legal producers on the market. According to him no less than 80 percent of the spirits producers have closed their business in the past eight years causing the loss of about 7,000 jobs.

The number of excise stamp for spirits decreased from about 456 million in 2003 to 151.5 million in 2009 and 136 million last year. In the first two months of 2011, the number of spirits excise stamps decreased to 9 million, from 17 million in January-February 2010, Dascalu added. The volume of spirits sales went to 204,000 hectoliters in 2010, from 227,000 hl in 2009 and consumption dropped from 8.5 liters per capita in 2008 to 6 liters per capita in 2009 and 5 liters per capita last year.

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 Simona Bazavan