A ban on the sale of alcohol and tobacco in supermarkets may lead to the respective rise in prices
Experts from the European Business Association are convinced that attempts to restrict the sale of alcoholic beverages and tobacco products will create an additional financial burden for businesses and may lead to higher product prices. Such restrictions were proposed by People’s Deputy Georgy Mazurash, in draft law №5805 registered in the Verkhovna Rada on July 19.
Establishing separate outlets for the sale of alcohol and tobacco will require capital investment from businesses, which may increase the prices of legal products and increase the price gap between counterfeit and legal goods. Besides, the number of official points of sale can be significantly reduced, and in some cases, they can completely disappear, which will encourage the consumption of counterfeit goods. The terms for the implementation of the proposed changes also raises questions. It is stipulated that the Law shall enter into force on the day following the day of its publication. As it is physically impossible to create a point of sale in one day, this will stop the sale of alcohol and tobacco products in Ukraine for an indefinitely long period of time.
Moreover, according to EBA experts, such changes may restrict competition in the Ukrainian market and encourage the formation of “alcohol monopolies”, excessive price increases for such products, and unjustified financial losses. It should be noted that in most EU countries, in particular in Eastern Europe, there is no such experience of restricting trade in alcohol and tobacco products. Besides, the draft law does not provide for separate rules governing the sale of alcohol and tobacco products in catering establishments.
The EBA community shares the desire to minimize the negative impact on public health from alcohol abuse and smoking. However, the proposed method is selective and inconsistent. We also did not see in the context of this draft law any analysis of law enforcement practices and statistics, which would indicate the ineffectiveness and inadequacy of existing restrictions and prohibitions on the sale of alcohol and tobacco products. In addition, the draft law does not take into account the assessment of financial and economic consequences of such changes for business and the state, such as budget losses from reducing the number of licenses for retail trade in tobacco and alcohol products.
National legislation already imposes a number of obligations and restrictions on businesses that directly or indirectly help reduce alcohol and tobacco consumption. These include, for example, licensing the sale of such products, a significant increase in the tax burden, special rules and restrictions on advertising, the introduction of state price regulation, a ban on sales to minors, and restrictions on sales at night, mandatory medical warnings for consumers.
In view of this, the EBA experts are convinced that in the fight to reduce alcohol and tobacco consumption, the state should use comprehensive methods, and not just limit the sale of such products. In particular, this should be done by properly informing consumers about the risks associated with the use of alcoholic beverages and tobacco products, building the necessary infrastructure to maintain a healthy lifestyle, and so on.
That is why the European Business Association appealed to MPs not to support such changes and to ensure the rejection of this draft law by the Verkhovna Rada of Ukraine.
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