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Monday, 4 June, 2001, 21:38 GMT 22:38 UK
Russian tax foul-up threatens vodka
Vodka on sale
Producers only have a week's supply left
A bureaucratic mess in Russia's tax system has brought most of the country's legal vodka production to a halt.

A law which came into effect on Friday requires bottles of Russian-produced wines and spirits to carry regional as well as federal excise stamps.


The vast majority of alcohol producers have halted their output. Many of them are suffering very badly

Head of producers' association
But the regional stamps have not yet been produced, and the equipment needed to attach them to the bottles has not been made.

Producers are not allowed to deliver new batches of alcohol without the stamps and most have stopped production.

The measure was introduced to combat bootlegging, which currently accounts for between 40% and 70% of total production.

Week's supply

Shops are still allowed to sell unstamped alcohol produced before the law came into effect.

But problems are expected in a matter of days as many producers have only a week's supply left.

"The vast majority of alcohol producers have halted their output," Pavel Shapkin, head of the National Alcohol Association, told BBC News Online.

"Many of them are suffering very badly."

Some producers warned that shortages could lead to unrest.

"We already saw longer queues for vodka on Friday, and if it continues we will get a vodka riot," Russian Wine and Vodka Co. marketing director German Klimovsky told The Moscow Times newspaper.

Three-month delay

Others said that the gap would be filled by imported brands, which do not require the new stamp, or by the very bootleggers the law was aimed at.

Mr Shapkin proposed a three-month delay in the implementation of the law to allow for regional excise mechanisms to be put in place.

The law was originally meant to come into force on 1 January, but was postponed for six months.

It stipulates a so-called split excise system. Tax is divided evenly between producers, who affix federal stamps, and special wholesale excise warehouses, who affix regional stamps.

So far, no more than 10 of the 400 excise warehouses needed to affix the stamps have been opened.

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