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France plans steep beer tax rises

France is planning heavy tax increases on beer, upsetting brewers - even in other countries.

President Francois Hollande is pushing through legislation to increase taxes on beer by 160% to help fund struggling social security programmes as France tries to lower a budget deficit hit hard by the economic crisis. The tax would affect local brews and the 30% of imported beer the French drink.

The Brewers of Europe trade group called the measure a "kick in the teeth" for brewers, who have seen production plummet by 6% and consumption by 8% in the EU since the economic crisis began in 2008.

Belgium and Germany could be the worst affected once the new legislation kicks in. The change means the price of beer will increase by about 20% in bars and supermarkets, said the French brewer's federation Brasseurs de France.

France is trying to keep its budget on an even keel, and President Hollande has been using taxation to raise income. His government said it hopes to raise 480 million euros (£386 million) from the increase to boost social benefits such as medical insurance and elderly care.

The industry fears some of the 26 other EU nations might do the same. That could seriously hit the microbreweries and old traditional brewers who had been making headway among discerning drinkers interested more in quality than quantity.

The local industry is centred in Alsace, hugging Germany and French Flanders, which borders Belgium. There are complaints the measure could put some out of business.

Central and southern France are predominantly wine country, and overall beer only represents 16% of the country's alcoholic drinks market.

However the Brewers of Europe said in a statement that beer is "being singled out" compared to wine.

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