High taxes will have minimal impact on beverage prices, says Revenue
The new multipliers used to calculate taxes on cold drinks - beer, soda, soft drinks, isotonics and energy drinks - will have a minimal impact on final prices, the Federal Revenue Service said on 01/10. According to the agency's general tax coordinator, Fernando Mombelli, prices will rise by a maximum of 0,25% with the increase in the calculation base for the Tax on Industrialized Products (IPI), the Social Integration Program (PIS) and the Contribution to o Social Security Financing (Cofins).
According to Mombelli, canned soft drinks will rise up to 0,17%, and soft drinks in glass bottles will increase up to 0,2%. The prices of soft drinks in PET bottles, which concentrate 80% of the sector's market, will not be readjusted because they did not have the calculation basis changed. For beers, the impact will correspond to 0,23% for returnable glass bottles, 0,25% for canned beer and 0,22% for disposable glass bottles, also called long neck.
The revenue coordinator pointed out that the percentages will not necessarily be passed on to prices. “These are only the maximum impacts, in case the manufacturers decide to pass on the entire tax increase. It is important to remember that the market is free, and companies can absorb the higher tax cost, not least because the percentages are small ”, he claimed.
The increase may not even reach the consumer. Last week, businessmen from the beverage sector met with the Minister of Finance, Guido Mantega, and assured that they will absorb the costs, without increasing prices, until a new tax model for the segment comes into force in early 2015. The discussions started in September and are expected to continue until the end of the year.
Businessmen and the government will discuss a new system to replace the current one, in which the rates are levied not on retail prices, but on a price list researched by Fundação Getulio Vargas and updated annually. The rates, in fact, do not apply to the average values charged to the final consumer, but to a multiplier that reduces the calculation basis to reflect prices in factories.
Source: EBC - Agência Brasil
Collaboration: Pernord Richard
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