Liquor

December 2002

The government will cut the liquor tax on beer made by microbreweries from next April for competing against less expensive "happoshu" low-malt beer. The tax will be reduced for new entrants into the beer market as well as existing regional brewers whose production is small. Companies that enter the market between next April and the end of March 2006 will receive a 20% tax cut on up to 200 kiloliters of output a year for the first three years after they are licensed to make beer. Existing brewers will be entitled to the same tax break if their production stood at 1,300 kiloliters or less during the latest fiscal year. The tax cut will be worth a maximum 8.88 million yen a year per brewer, given that the tax on 200 kiloliters of beer is currently 44.4 million yen. The figure translates into a 15 yen tax reduction on a 350ml can, at a time when the same size can of low-malt beer is facing a tax hike of 10 yen from next May. Microbreweries have been springing up nationwide, particularly since the liquor law was revised in 1994 as part of government deregulation efforts. Even those with annual production of only 60 kiloliters have been licensed as microbrewers since then, down from the previous 2,000 kiloliters. However, low-malt brews, many priced as low as 140 yen per 350ml can, have become more popular recently, forcing many local brewers, which sell their beer for some 400 yen, out of business. The government hopes that the tax cut will help reinvigorate local economies. (December 30, the Nihon Keizai Shimbun)