Austerity.. Craft breweries won’t face the tax increases Brussels demanded, but brandy is next in the firing line.

In the war over austerity, Greek beer has won its first battle

In the war over austerity, Greek beer has won its first battle.

Taxes on small breweries won’t be increased, as the country’s creditors insisted. Initially, the plan was to abolish favorable tax treatment for microbreweries (those bottling less than about 530 gallons per year), which pay about half the taxes of large international beer companies. Evidently some, including foreign lenders, believed the special treatment was damaging free competition.

But the small brewers and the political left had a quite opposite understanding: The tax discount was introduced in 2003 under a European Union directive to encourage small businesses in economically disadvantaged areas, such as Thrace, on the border with Turkey.

The largest Greek microbrewery is 14 times smaller than some of its multinational competitors. It would be almost impossible to compete without some support. A tax increase would likely put most of the small-scale brewers out of business.

For all these reasons, in the end, Alexis Tsipras’ government rejected the increase and vowed to find the €3.2 million somewhere else. All in all, as many Greek news sites have pointed out, it’s not such an astronomical figure — the various ministries could shave it off their bills.

So the beer “revolt” was successful. It’s a first small response to the neoliberal program that the European Commission, the European Central Bank, the International Monetary Fund and the European Stability Mechanism continue to apply. But it only worked because the tax increase on beer was not explicitly included in the compromise that the Greek government was practically forced to sign in August.

It remains to be seen, now, what will happen to Tsipouro and Tsikoudia, the Greek brandies that also pay 50 percent lower taxes than other alcoholic beverages. According to the Troika, this violates regulations and may therefore be considered nefarious “state aid.”

Farmers and growers who produce brandy only occasionally, and receive even more favorable taxation, may also find themselves in the viewfinder. Brussels doesn’t intend to make any exceptions. But as many Greek commentators have already pointed out, more expensive alcohol will only create a bootleg market that isn’t taxed at all.