Taxes...Beer...and more Taxes.

All in all is was a great Wednesday holiday. Anytime you can get a day off mid-week, it just seems to make the whole week go by faster. Wednesday I drank some great chocolate brews, took a nice bike ride to the river, and watched the University of Kentucky pull out a great win over Florida with a last second three by Superman-aka Jodie Meeks. It was a great day.

However, that joy was quickly stolen from me when I read the Lexington Herald Leader this morning. I discovered that Kentucky has decided to institute a 6% sales tax on booze. Paying more for beer is never a good thing. Now, beer in KY is still drastically cheaper than it is here in Japan, be sure.

No doubt you have read countless articles on the way Japanese beer and other drinks criminally masquerading to be beer are taxed. I have too. But I wonder...how much of one can of beer's price is tax? I did a little research and this is what I came up with....

According to some older stats (so this is a conservative estimate) Japanese real beer is taxed 222,000 yen per kiloliter. This means that each liter is taxed...222 yen. (Yeah math!) So, your average tall boy of Asahi Super Dry (500ml) is "taxed" 111 yen. Hummm... Those stats are a little old, so it is most likely a bit higher now... Contrast that to products made with less than 25% malt, which are only taxed 50 yen per 500ml.

Ever since the sneaky "Big Four" started making beers with less malt, the Japanese government has countered with increased taxes on Happoshu. Now, it appears that the government is catching up even more--and a tax increase on the "third-category beers" is on the horizon. As one article puts it:

Now that taxes have just about caught up with happoshu, pushing it close to beer pricewise, brewers are turning to a third option: beverages made without any malted barley at all. These Frankenstein concoctions rely on peas and soybeans for fermentable sugars (in place of malted barley, or even corn or rice), and are cobbled together from distilled alcohol, artificial flavoring, and coloring agents. They are low in tax and low in flavor, but for now at least they are keeping the brewers ahead of the tax curve, and their popularity is rising. It seems only a matter of time before another tax revision drives brewers to something even further from their roots, though at this point it is doubtful that any reasonable alternatives remain.*

There is also more trouble "brewing" (harhar!) for the Japanese government and the producers of happoshu and "3rd brews." Some foreign producers of beer are crying foul. It seems that the tax breaks for happoshu create an unfair barrier to trade, and in fact are in violation of WTO's General Agreement on Tariffs and Trade Article III:Sec 2**. At the risk of turning this post into an economics lesson-- what Article III: Sec 2 basically says is that you can't make an importer pay extra taxes on "like domestic products" that aren't taxed. So in other words, I can't make you pay a tax on your imported beer that my domestic beer isn't subject to. Now the question is, "What are like domestic products?" Japan of course says that "3rd brews" aren't a like product of beer at all... We'll wait on pins and needles to see what happens.

Of course, this is all a moot point if you don't drink happoshu and "3rd brews"--and I don't. (Unless there is no alternative...) You can tax the hell out of it as far as I'm concerned, as long as you don't raise the taxes any more on the real stuff.

Ok, that was clearly too much thinking and almost resembled a paper for school. I promise I will follow with something mind-numbing about good beer.

If you are looking to read more about tax and all this stuff, check out these links:

http://www.rieti.go.jp/en/miyakodayori/052.html

http://blogs.telegraph.co.uk/asia_file/blog/2009/01/16/legal_trouble_brewing_for_japans_lowtax_beer





*http://www.japaninc.com/mgz_august_2008_beer-brewers
**"The products of the territory of any Member imported into the territory of any other Member shall not be subject, directly or indirectly, to internal taxes or any other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products."