I’m in Armenia, the land of fine brandy.  At the supermarket today I saw a half-litre bottle of Grant’s whisky for the equivalent of US$9.38.  That’s US$14.07 for a standard 750ml bottle.  The Armenian Government whacks on import duty (10%), excise tax (30%) and VAT (20%) and I suspect that the supermarket still manages to make a profit.  But that fully-taxed retail price beats the typical price in any airport duty-free shop that I know of.

It does not come as a surprise that duty-free shops make mega-super-profits, but can anyone tell me where they go?  Are governments creaming off a tax under another name?  How much goes to the airport owners?  Is the whole duty-free racket a way to give backdoor subsidies to the civil aviation industry?  This would be consistent with the airlines’ exemption from tax on the fuel they burn and the tickets they sell.

Can anyone enlighten me?