Calls in Parliament for higher alcohol tax hikes

Price of beer may fall, in spite of higher tax

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The tax on beer is likely to rise next year more than the three cents a bottle or can, as proposed by the government. Proposals to this effect are being worked on in the Parliament's Finance Committee. On Wednesday the proposal won support from the Committee on Social Affairs and Health.
      The government has proposed tax hikes on alcoholic beverages averaging 11.5 per cent, with the greatest impact on the price strong spirits. The problem with beer is that while the excise tax is rising, the packaging tax on cans, of about three cents per can, will be lifted
      In the statement by the Committee for Social Affairs, the lifting of the packaging tax will boost the competitive position of foreign brands of beer, which could lead to a further drop in the price of beer.
     
While the Finance Committee, chaired by Mika Lintilä (Centre), has focused largely on the taxation of beer, the Social Affairs Committee chaired by Juha Rehula (Centre) would like to go further than the government on raising alcohol taxes in general.
      The government's proposal would raise the price of strong spirits by more than ten per cent. The Social Affairs Committee has heard from experts who have said that the price of all alcoholic beverages should rise by about 20 per cent to have an effect on consumption.
      The committee feels that the price of all types alcoholic beverages should be raised, even if this were to mean an increase in personal imports from abroad.
      The Social Affairs Committee feels that it is necessary to see to it in the future that the price of alcohol does not fall behind overall price rises. "In any case, the tax increases should be continued in this electoral term."
     
One of the experts heard by the Social Affairs Committee, Ismo Tuominen of the Ministry of Social Affairs and Health, has said that the price of beer could actually come down, even if the tax goes up.
      Tuominen notes that discussion of price rises based on percentages is deceptive, because the percentages are not directly comparable.
      "When the alcohol tax was decreased (2004), the price was calculated according to the highest price. Now when we talk about increases, it is calculated from the lowest price", Tuominen says.
      "If the price of beer were to rise by the 3.5 per cent that the government has proposed, after falling four per cent a few years ago, everyone can calculate if this was a price rise at all", Even the planned 20 per cent hike does not impress him. "From half a euro to 60 cents is not much anything."
     
More important than fiddling with percentages would be to calculate an appropriate price for beer. "Examined from health arguments, an appropriate price would be one euro, which would lead to a permanent reduction in drinking by children and youth."
      Factors influencing the price of beer include the upcoming rise in the tax on alcohol, the elimination of the packaging tax for cans, restrictions on short-term discounts, and the banning of discounts for bulk purchases.
      Tuominen says that while the price of a 12-pack might rise, it could mean a discount of up to 50 per cent for individual bottles in the long run. The brewing industry has discounted such claims of reduced prices as highly unlikely.


Previously in HS International Edition:
  Sales of alcohol reach new record (11.10.2007)
  6,000 alcohol-related deaths in Finland in 2005 (31.8.2007)
  Alcohol-related problems on increase during summer holiday season (14.8.2007)
  EDITORIAL: Alcohol taxation should be increased urgently (1.8.2007)
  Parliamentary parties ready for alcohol tax hike (14.2.2007)
  Warning labels coming on containers of alcoholic beverages (7.2.2007)
  Alcohol abuse most common killer of working-age Finnish men (1.11.2006)

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