PRESS RELEASE:
10.08.2007
Alcohol tax increases should be further considered
Finland will once again have the EU’s highest beer tax
“There’s good reason for the government to reconsider the weighting and timing of tax increases during its budgetary process. The beer tax increase should be completely abandoned, or at the very least the proposed rise should be implemented in stages over the government’s entire term,” says Timo Jaatinen, Managing Director of the Federation of the Brewing and Soft Drinks Industry. “It’s also puzzling that Finland places a lighter tax
on wine than on beer, even though beer is a domestic product and a
milder alcoholic beverage.”
The Ministry of Finance’s 2008 Budget proposes increases in alcohol taxation. Tax on beer, wine and intermediate products would rise by 10%, and that on spirits by 15%. Although the 2004 tax reduction was not at all balanced – it was weighted towards spirits – the current increases will affect all beverages more equally. The proposed increases will therefore barely change the relative taxation between different alcoholic beverages.
After the 2004 tax reduction, Finland’s beer tax fell to the third highest in the EU behind Ireland and Great Britain. However, it remained notably higher than Sweden’s and five times that of Estonia’s. The Ministry of Finance’s proposal would once again make Finland’s beer tax the highest in the EU.
One basis for the tax increase has been the Estonian government’s plans to raise Estonian alcohol taxation, but this argument does not hold water. Due to Estonia’s significantly lower tax level, a sudden hike of 10% in Finland would only increase the margin between the two countries. This would enable advantageous pricing in Estonia and thereby increase private imports to Finland.
Jaatinen also reminds us that Finland would still have encountered the same health hazards without the tax reduction. Alcohol would simply have been purchased abroad or on the black market. Finnish production would have further suffered, and Finland would be in the same situation as Sweden, where the black market and private imports by travellers are a major problem. Private imports from Estonia to Finland are now under control, and this should not be jeopardised by a hasty tax hike.
Finland’s alcohol policy has for decades been founded on the limited availability of alcoholic beverages and higher taxation than in other EU countries. Yet alcohol still causes more than its share of problems in Finland. Price changes can marginally influence alcohol consumption in the short term, but the only factor that will work long-term is education to change attitudes that glamorise alcohol abuse.
Additional information:
Managing Director Timo Jaatinen,
tel. +358 (0)9 1488 71
Communications Manager Katri Tuulensuu, tel.
+358 (0)9 1488 7601, GSM +358 (0)40 777 1938
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 Oy Hartwall Ab, Nokian Panimo Oy, Olvi Oyj
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 four largest industries in the food and drink branch in terms of
the value of production.
