Panimo- ja virvoitusjuomateollisuusliittoPuh. (09) 148 871 Fax (09) 14887201 email@example.com
Taxation on fermented alcoholic beverages was increased by ten per cent at the beginning of 2008 and by another ten per cent at the beginning of this year. In connection with its mid-term review, the government has once again decided to propose new alcohol tax hikes.
On 1 March 2004 Finland's beer tax was first lowered by about 32% in anticipation of the neighbouring country Estonia's joining the European Union on May 1st. Prices in shops and restaurants fell. Retail prices were expected to fall by about 15%. The effect of the tax cut on the selling price of beer was much smaller. Value added tax on beer remained at the same rate of 22%. However, the prices of beer sank more than 15 % due to beer promotions in retail shops.
The lowering of the beer tax was a step in the right direction to curb private imports and related problems. With it the worst scenario of uncontrolled growth in private imports was avoided to some degree. Without promotions in shops, private imports would be considerably higher. According to research, private imports of beer totalled 20,7 million litres in 2008, purchased mainly in Estonia and on ships.
Beer still costs more than in Estonia even with the ongoing promotions. Today, Finland’s beer tax is again the highest in the European Union and almost five times as high as in Estonia. Taxes account for about 55-60 % of the price of a 0.33 litre bottle of beer. On the discount beer, tax could be more than 80 % of the price. The new alcohol tax hikes that were announced recently would make the tax differences between the countries intolerable.
In the long run, beer sales with unhealthy margins are unsustainable for breweries. When prices in Finland rise, the feared outcome is a rush to buy cheap beer in Estonia. Travel to Estonia hit a record peak last year 2008 and is still on the rise. This also shifts other types of consumption demand and use of services from Finland to Estonia.
Beer tax in EU countries January 2010 € / litre
5% abv beer