Minister Warns Excise Hike Will Damage Agriculture Growth

Minister Naydenov believes the raising of the alcohol excise tax would be counterproductive. Photo by BGNES

Bulgaria’s agriculture grew by 3% in the previous quarter, which makes it the only economy sector with growth amidst the economic crisis.

This National Statistical Institute data was cited Sunday by Agriculture Minister, Miroslav Naydenov, as an argument against the suggested hike of hard liquor excise.

On Thursday, the Parliamentary Budget Committee increased on second reading the alcohol and cigarettes’ excise duties from their values approved on first read. The hard liquor tax is proposed to be increased by BGN 0,72 per liter.

The increase also includes the traditional homemade grape and fruit brandy - “rakia” – where just the first 30 liters would be free of taxation.

Bulgaria’s Finance Minister, Simeon Djankov, said Friday the increased alcohol tax would bring an additional BNG 60 M to the 2010 budget, which would immediately be invested into the education sector.

Agriculture Minister Naydenov, however, stated Sunday that the rise of the excise was hardly going to bring any additional revenues to the state budget.

In his words, the Bulgarian agricultural producers have been unable to sell 80 000 tons of grapes in 2009, and the rise of the excise will be an additional blow to them.

In addition, Naydenov said the whole issue with the homemade “rakia” had a psychological impact on the general population even though the suggested excise increase was not significant. He has made clear his conviction that the excise hike would be counterproductive.

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