Vodka instead of oil

Over the centuries, the Russian government has done a great deal to get the nation addicted to alcohol, a form of narcotic protoplasmic poison, and has monopolized the highly profitable alcohol trade.

MOSCOW. (RIA Novosti political commentator Vlad Grinkevich)

Over the centuries, the Russian government has done a great deal to get the nation addicted to alcohol, a form of narcotic protoplasmic poison, and has monopolized the highly profitable alcohol trade.

In Soviet times, the state alcohol monopoly accounted for 25% of budgetary proceeds.

Although the fuel and energy sector is the Russian economy's main driving force, the current global financial crisis may reduce the influx of petrodollars that have fuelled the economy in the last eight years.

By boosting alcohol sale proceeds, the state probably hopes to partially compensate losses incurred by falling oil prices.

The Russian government regularly overhauls the alcohol industry to purge the market of illegal and fake beverages accounting for an estimated 50% of total sales. This is an important objective because illegal alcohol is extremely damaging to health and because the black market sector siphons off budgetary proceeds. In January-September 2008, the state received 60 billion rubles in excise tax proceeds, while profiteers pocketed the same sum.

Last week, government officials once again focused on the alcohol market. First Deputy Prime Minister Viktor Zubkov chaired a meeting that discussed ways of streamlining alcohol sector regulation.

Officials from six federal ministries and departments, including the Finance Ministry, the Economic Development Ministry and the Federal Tax Service, were asked to draft a presidential decree on establishing a Federal Alcohol Market Control Service and to submit it to the government.

The new agency will draft legislation for regulating the alcohol market, streamline the excise tax policy and the work of the Unified State Automated Alcohol Registration System.

Although the draft federal budget until 2011 stipulates annual increases in alcohol and ethyl-alcohol excise-tax proceeds, in fact these important sources of revenue fell by 3.1% and 30%, respectively, in January-September 2008.

This scenario is highly undesirable because nationwide alcohol and ethyl-alcohol excise tax proceeds are expected to soar by 47% and 34%, respectively, by 2011.

Zubkov proposed minimal wholesale and retail vodka prices for combating illegal producers. A 0.5-liter bottle of vodka should cost at least 80 rubles. This decision is absolutely justified because the price of legal vodka, including production costs, taxes, wholesale and retail surcharges, should total 80 to 100 rubles, while cheaper vodka is obviously fake.

The creation of an alcohol market watchdog has been discussed more than once. Each time the issue was raised, numerous analysts started talking about the possible introduction of the state alcohol monopoly. However, government officials always refuted such claims.

This time, however, the government is discussing alcohol sector development against the backdrop of the global economic crisis, which has caused oil prices to plunge.

Although Finance Minister Alexei Kudrin claimed that there would be no budget deficit if a barrel of oil cost $50, oil prices have now plummeted below this level.

In addition, Nikolai Tokarev, CEO of pipeline monopoly Transneft, said Russia had exported 25% less oil in early November than planned, and that export volumes could plunge even more in December.

With the onset of a global economic recession, any increase in oil exports could bring the prices down.

The government, which has remembered the trustworthy high-profit vodka once again, can promote increased alcohol consumption through hidden advertising and oust illegal vodka producers from the market.

Officials say the proposed Federal Alcohol Market Control Service will aim to fight black marketeers.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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