Tax cut insufficient to prevent sharp growth in private imports of beer

Press release 20 August 2003

Tax cut insufficient to prevent sharp growth in private imports of beer

The Government has today proposed a 32% lowering of the beer tax. This tax cut is insufficient. It does not correspond to consumers' idea of the tax and price level necessary to prevent a sizable beer rally from Sweden, much less Estonia. Even reaching the present tax level in Sweden, which is also high, would have required a halving of the beer tax. Finland still has the highest beer tax in the European Union.

Consumers can be expected to vote with their feet. A survey indicated that a price cut of at least 30% is necessary to prevent an increase in private imports. After the tax cut domestic middle-strength beer will still cost over twice as much and strong beer three times as much compared with prices in Estonia.

The Federation of the Brewing and Soft Drinks Industry had hoped for the tax solution to promote domestic production and employment. In this respect the minimal cut proposed by the Ministry of Social Affairs and Health was irresponsible, and the Government's proposal only goes half way. The tax solution is regrettably in conflict with the Government's employment objective.

The Government will have to return to the issue of beer tax in the future, either in the form of an additional tax cut or as a result of rising unemployment costs.

Additional information:
Managing Director Risto Saarinen, Federation of the Brewing and Soft Drinks Industry, tel. +358 9 1488 71 (switchboard)

The Federation of the Brewing and Soft Drinks Industry promotes the interests of producers of beer, cider, long drinks, soft drinks and mineral waters in Finland. Its members are Oyj Hartwall Abp, Olvi Oyj, Pirkanmaan Uusi Panimo - PUP Oy and Oy Sinebrychoff Ab. The Federation of the Brewing and Soft Drinks Industry operates in connection with the Finnish Food and Drink Industries' Federation and is among the three largest industries in the food and drink branch in terms of the value of production.