Social Services Minister calls for 10 per cent hike in tobacco tax
National Public Health Institute director calls for higher tax on wine and beer
Minister of Social Services Paula Risikko (Nat. Coalition Party) wants a ten per cent increase in the tax on tobacco products from the beginning of next year. "Discussion about the harm caused by tobacco has been sidelined by the discussion on alcohol and drugs. It is time to take up the issue."
The last time that the tobacco tax was raised was in 1996.
Risikko would specifically target the cheaper brands of cigarettes that are most popular among younger smokers. She also calls for a sharper rise in the tax on loose cigarette tobacco than on other tobacco products.
The aim is primarily to reduce smoking and health problems related to it.
"Consumption of tobacco is influenced by both price as well as availability and education. Now we must influence the price, because it is budget time", Risikko said on her first day after her summer holiday.
She proposes that the price increase should be included in next year's state budget, which will be discussed by the government next week. Such an increase has been written into the government's policy programme, but Finance Minister Jyri Katainen (Nat. Coalition Party) did not include it in the budget proposal that he put forward a couple of weeks ago. He said that a higher tobacco tax could lead to increased smuggling of cigarettes.
Risikko wants to set up a joint working group of the Ministry for Social Affairs and Health, and the Ministry of Finance to plan the tax hike. If consumption of tobacco remains at the present level, the tax increase would add between EUR 40-50 million to the nearly EUR 700 million in annual tobacco tax revenue.
The Finance Ministry opposes the tax increase, because it believes that such a move would lead to increased personal imports from Estonia, especially now that restrictions on imports from that country are set to be lifted. Currently, Finns are restricted to bringing in 200 cigarettes. The change is to come after Estonia raises its tobacco tax above the EU minimum. Even then, tobacco in Estonia would continue to be cheaper than in Finland.
Risikko proposes new personal import restrictions after next summer, with a "personal use quota" of 800 cigarettes.
"This kind of a restriction is in use in France, for instance, and it has not been deemed to violate EU norms", Risikko says.
She ponders for a moment on how to respond to criticism that such a tax hike would be one more hardship imposed on smokers.
"They probably consider me a health terrorist, but I am looking at the matter from the point of view of national health. As a specialist nurse I have taken care of lung cancer patients, and I know what tobacco does. If I can prolong the life of a single person by one day with my proposal, I would be satisfied."
Risikko accepts Katainen's proposal for a 15 per cent hike in the taxation of distilled spirits, and a ten per cent rise in the tax on wine and beer.
"This is a good start, but later the tax needs to be raised more."
Risikko says that there are pressures for a higher increase immediately, but before new decisions are made, she feels that it is necessary to monitor the results of the change. She proposes the setting up of a common working group of the Ministry of Social Affairs and Health and the Ministry of Finance to follow up on the impact, and which would issue an assessment in 2009. At that time, there could be a decision on a new increase.
In 2004 Finland sharply reduced taxation of alcoholic beverages to prevent widespread personal imports from Estonia, which became a member of the European Union in that year. The move was followed by a steep rise in alcohol consumption and related problems in public order and health.
Pekka Puska, Director-General of the National Public Health Institute, has called for a higher increase in the tax on beer and wine than planned in the draft budget.
Puska said on Monday that mild drinks are first steps on the way to heavy consumption.
He also called for the introduction of a milder class-II beer to be sold in food stores alongside class III beer, which has an alcohol content of up to 4.7 per cent. Beer that is stronger than that - class IV - is only sold in Alko retail monopoly shops.
Previously in HS International Edition:
Alcohol-related problems on increase during summer holiday season (14.8.2007)
Budget proposal: alcohol tax to go up, taxation of pensioners and inheritance to ease (2.8.2007)
EDITORIAL: Alcohol taxation should be increased urgently (1.8.2007)
Alcohol and tobacco tax to rise in Estonia next year (25.5.2007)
Significant rise in overall alcohol consumption in Finland last year (25.2.2005)