[Exclusive] Amid concerns that “draft beer prices will rise,” ruling party also pushes to extend liquor tax relief

[Financial News] With analysts saying that the end of draft beer excise-tax relief next year could raise the price of a 500cc glass by up to 1,000 won, the first call for an extension of the relief has emerged from the Democratic Party of Korea. The People Power Party has also introduced a bill to extend the benefit, raising the likelihood that the ruling and opposition parties will find common ground at the Tax Subcommittee of the National Assembly’s Finance, Economy and Planning Committee, which is scheduled to meet this November.
According to the National Assembly on the 13th, Ahn Do-geol, a Democratic Party of Korea lawmaker serving on the Finance, Economy and Planning Committee’s Tax Subcommittee, introduced an amendment to the Liquor Tax Act that would extend the sunset date for draft beer excise-tax relief by two years, from its current deadline of December 31 this year. The bill would raise the tax relief rate from 20% to 30%. The aim is to ensure fairness, since low-alcohol mixed drinks such as highballs receive a 30% tax reduction.
When the Ministry of Finance and Economy announced its tax reform plan on August 3, it decided not to extend the 20% excise-tax relief for draft beer sold in containers of 8L or more. The relief was introduced in 2020 amid the COVID-19 pandemic, but with roughly seven years having passed, the plan is to begin taxing draft beer next year. However, with the cost-of-living economy still sluggish amid high prices, small business owners and the self-employed are concerned about worsening business conditions. If the change leads to higher draft beer prices, not only the liquor industry but also pubs are expected to take a hit.
Opposition parties have voiced concern that ending the draft beer excise-tax relief would increase the burden on consumers as well as small business owners. In August, People Power Party lawmaker Kim Eun-hye also introduced an amendment to the Liquor Tax Act that would abolish the sunset clause for the relief and make it permanent. At the time, Kim criticized the proposal, saying, “For people suffering from heat waves and high prices, a tax increase on draft beer—a kind of ‘small but certain happiness’—will ultimately become a burden on the public.” She added, “Even though the original volume-based tax system is still in place, raising taxes only on draft beer is a rapacious way of imposing higher taxes on ordinary people.”
The Democratic Party’s push to extend the deadline for draft beer excise-tax relief appears to be a way of countering criticism that the government and ruling party are raising taxes on ordinary people. Ahn is said to have introduced the bill in the hope that it would be submitted to the Tax Subcommittee and receive full discussion.
With bills to extend the draft beer excise-tax relief introduced by both the ruling and opposition parties, reaching an agreement in the Tax Subcommittee is not expected to be difficult. However, as the ruling party has not yet held in-depth deliberations on the matter, discussions are expected to begin when the subcommittee meets in November.
[email protected] Lee Hae-ram, Kim Hyeong-gu Reporter