SINGAPORE: Deputy Prime Minister Tharman Shanmugaratnam announced on Friday that liquor duties will increase by 25 per cent to keep pace with inflation.
Entertainment outlets Channel NewsAsia spoke with said they are already facing cost pressures as a result of the restriction of foreign labour and rental increases.
The brunt of the latest tax, the first increase since 2004, will most likely be passed on to consumers.
Two major outlets Channel NewsAsia spoke with said they have the advantage of bargaining power with wholesalers as they buy in larger quantities.
But smaller outlets could be worse off.
The excise rate on a litre of beer is about S$48 per litre of alcoholic content. The increase would bring the rate to S$60 per litre of alcoholic content.
For wines and spirits, the current rate is S$70 per litre of alcoholic content. This would go up to S$88 per litre of alcoholic content.
According to the Finance Ministry, if the full burden of tax is passed on to consumers, a can of beer at the local coffeeshop could increase by about 20 cents.
The price of a bottle of wine could increase by almost S$2.
But consumers Channel NewsAsia spoke with said while the tax increase is excessive and sudden, it will not stop most from frequenting watering holes.
One distributor told Channel NewsAsia they generally operate on a thin profit margin, an average of 15 per cent.
The move would mean businesses would be hit hard.
Rajesh Ram Singh, owner of Liquor Bar Singapore, said: "(Consumers) will actually drink less. They will think twice before spending extra cash, especially for events, they will buy less. Generally sales will drop definitely."
One of the biggest alcohol distributors in Singapore, Asia Pacific Breweries, said it was surprised by the quantum of increase, and that it will have a significant impact on its business.
It added it is studying the implications of the hike.
Excise duties for cigarettes will increase by 10 per cent.
Mr Tharman said this is to curb the rise in smoking, especially among the youth.
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