A Bootlegger, a Baptist and a Russian Walk into a Bar…
October 6, 2009
The Russian government is proposing a tripling of the excise tax on beer. The beer tax would increase from 3 rubles to 10 rubles per liter by 2012. This is roughly equivalent to an increase from 38 cents to $1.25 per gallon. If Russia were a U.S. state, this would move them from having the 12th highest excise tax on beer to the highest. (See U.S. rates here.)
This provides an example of Bruce Yandle’s Bootleggers and Baptists Theory. In this case, the government is playing the role of both the bootleggers and the Baptists. The Russian government is stating that this is part of a larger effort to curb drinking over all. Government has also proposed reducing the hours in which alcohol can be sold and banning liquor sales at airports. The government appears to be on one hand a concerned moral authority. On the other hand, the government is facing a large budget deficit. A heavy tax of beer and other spirits will help to close this budget gap.
A tax goes down smoother when chased by moral high-mindedness.