Little support for quick rise in alcohol tax - liquor tourism to Estonia eases somewhat

Most of the leaders of the Parliamentary groups of Finland’s political parties are not in favour of a rapid increase in the tax on alcoholic beverages. Most of the leaders want to wait for more information on the impact of the cut in the alcohol tax before considering a possible tax hike.
      Prime Minister Matti Vanhanen (Centre) said on Monday that there could be room for an increase in the tax, and that the issue would be discussed during the autumn.
      Of the eight Parliamentary party leaders, only the chairs of the groups of the Swedish People’s Party, the Christian Democratic Party, and the Green League were in favour of raising the alcohol tax immediately.
     
The issue of alcohol taxation, including the impact of the tax policies of different countries on their neighbours, was raised at a meeting of the prime ministers of the Nordic Countries in Iceland on Sunday.
      Denmark lowered its tax on alcohol last autumn, and Finland followed suit in March. Sweden is also considering such a move, in the light of a thriving black market and increased personal imports from its Nordic neighbours.
     
Most Parliamentary party group leaders now want to wait to hear the results of studies on how the tax cut in March has affected consumption before considering an increase in the present tax on alcohol.
      The opposition National Coalition Party group leader Ben Zyskowicz warned against panic, even if there may have been an increase in consumption and related bad behaviour, saying that the novelty could wear off.
      Centre Party Parliamentary group chairman Timo Kalli notes that the tax on alcohol should be so low as not to encourage illegal sales and massive personal imports from abroad.
      Christina Gestrin of the Swedish People’s Party, Päivi Räsänen of the Christian Democratic Party, and Kirsi Ojansuu, vice chair of the Green League all feel that the alcohol tax could be raised. Ojansuu and Gestrin would like to focus the hike on strong spirits, saying that young people are drinking hard liquor more than before.
     
There is general agreement among decision-makers that the main criteria for setting taxation on alcohol should focus on public health; maximising tax revenue for the state should be a secondary consideration.
      The chairman of the Parliamentary Committee on Social Affairs and Health, Valto Koski (SDP), hopes that the Nordic Countries and Estonia might agree on a common policy line on alcohol taxation.
      There is little solid statistical evidence on how harm caused by drinking has developed, although there is no lack of anecdotal information of increasing numbers of people passing out in parks, urinating in public, driving while intoxicated, and neglecting their children.
      "We have started to follow up on the harm that is caused, and are thinking of new ways to monitor it", says Marja Holmila, research professor at the National Research and Development Centre for Welfare and Health. "We need some perspective."
      Finance Secretary Petri Malinen of the Ministry of Finance agrees. "We do not yet have enough information for a firm decision. We need reliable and comprehensive data over 6 - 7 months."
      Malinen notes that the purpose of the reduction in the alcohol tax in March was to reduce imports of cheap alcohol from other European Union countries, especially nearby Estonia, which joined the EU in May.
      In the worst-case scenarios, it was feared that more than half of the strong spirits consumed in Finland would be imported by travellers. Experts believe that imports could currently account for about one fifth of consumption.
     
In Estonia, a surge in sales which began with EU membership in May has slackened off somewhat.
      In Finland, the alcohol retail monopoly Alko reports that sales of strong spirits have increased by nearly 23% over last year. The drop in the alcohol tax in early March led to an immediate surge of 72% in sales of strong spirits, but this has eased during the spring and summer.
     
The City of Tallinn and a number of other Estonian communities have taken measures to reduce the booming trade in alcoholic beverages. Tallinn and nearby neighbouring municipalities have banned late night sales of alcoholic beverages, and as of next summer, small shops will not be allowed to sell strong spirits at all.
      The Estonian government has also decided to raise the alcohol tax by 20% from the beginning of next year.


Previously in HS International Edition:
  Alcohol rehabilitation clinics expect post-summer holiday rush (3.8.2004)
  Nordic alcohol survey: Sales of strong spirits highest in Finland (2.8.2004)
  Record liquor sales in Tallinn stores over weekend as Finns hoard cheap alcohol (3.5.3004)
  Programme aimed at reducing harm of increased alcohol consumption (28.4.2004)
  Cheaper alcohol sparks surge in retail sales nationwide (12.3.2004)
  Tax cut means booze is cheaper than ever in Finland (2.3.2004)
  Sweden not to follow Finlands lead on alcohol policy (8.1.2004)
  Tax cuts lead to domino effect in Nordic booze tourism (7.10.2003)