PRESS RELEASE: 07.03.2012
Study: Transferring medium-strength beer to Alko would increase travellers’ private imports by a third
A study published today by Pellervo Economic Research (PTT) indicates that if medium-strength beer (excise group III) were transferred to Alko and lower-strength beer (group II) were sold in grocery stores, this would have a significant impact on state tax revenues, the structure of the trade, and travellers’ private imports of alcoholic beverages.
If current pricing and tax rates were to remain unchanged, the price of medium-strength beer would increase by 40 per cent and travellers’ private imports could increase by up to a third. In order to prevent private imports by travellers, the state would have to either reduce beer taxation and/or lower Alko’s product prices. Both of these options would significantly reduce the State’s revenue from alcohol, and hundreds of grocery stores would go out of business.
“Finland should not implement any more measures that encourage travellers to import alcoholic beverages. If medium-strength beer were transferred to Alko, we wouldn’t see losses only in Finnish industry and Finnish jobs – if tax revenues fall, all citizens will suffer,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.
Travellers’ private imports currently deprive the State of an estimated EUR 330 million in tax revenue. VAT accounts for about a third of this loss, and alcohol tax revenue for the other two thirds. Transferring medium-strength beer to Alko could cause tax revenues to fall by at least another ten per cent.
It’s highly probable that the current questionnaire-based studies do not reveal the full scale of travellers’ private imports. When answering surveys about alcohol, it’s typical for respondents to lower the volumes involved. And these surveys do not, for example, cover the thousands of Estonians who work in Finland.
“Finland’s beer tax is the highest in the EU, standing at over five times that of Estonia’s. The State is therefore encouraging people to fetch alcoholic beverages from Estonia. Last year, travellers imported a total of over 45 million litres of brewery beverages alone, and the tax rise at the beginning of 2012 will only serve to further increase this volume,” says Ussa.
Last autumn, there was a lot of debate in Finland about transferring medium-strength beer from grocery stores to Alko and selling only lower-strength beer in grocery stores. These discussions didn’t consider some of the major consequences of such a move, such as consolidation in the grocery trade, an increase in travellers’ private imports of alcohol, and a reduction in state tax revenues. The Federation of the Brewing and Soft Drinks Industry and the Finnish Grocery Trade Association commissioned Pellervo Economic Research to study the impact of these significant issues.
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Read PTT’s study (in Finnish): Medium-strength beer to Alko and
lower-strength beer in stores (pdf)
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 represents Finland’s fourth largest industry in the food and drink branch in terms of the value of production.