Itar-Tass said the reduction would raise profit levels at distilleries and translate into lower prices.
Under Russia's complicated procedures for calculating excise duties on domestically produced alcohol, a 5-percent cut in duties has a magnified impact on prices.
Industry experts say the price of vodka could drop by as much as 30 percent a bottle as a result of the excise duty decision.
Some industry lobbyists had called for a cut of 15 percent in the duties.
But Finance Ministry officials doubted whether losses to the budget from such a large reduction could be recouped through higher output.
Health officials also have voiced concern about Russia's problems with chronic alcoholism.
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