Surge in crime after alcohol price cut - no plans for tax hike during budget talks

Homicides and attempted homicides, aggravated assaults, and calls to police for domestic disturbances increased by one fifth during the first seven months of this year compared with the same time last year.
      The figures were from a police report presented at a meeting of the Social Democratic Party’s Parliamentary group by Minister of the Interior Kari Rajamäki (SDP) on Monday.
      There has also been a sharp increase in teenage binge drinking, as well as driving while under the influence of alcohol. However, the increase in DUI is at least partly attributable to better enforcement.
     
Although many ministers have criticised the tax cut, there are no plans for revisions of alcohol taxation in the government’s budget talks, which begin on Wednesday.
      Prime Minister Matti Vanhanen said on Tuesday that the government would hear a report and discuss the current alcohol situation.
      Plans are to re-examine the situation later in the autumn when more information on consumption trends becomes available.
      Liisa Hyssälä (Centre), the Minister for social Services, would like to wait beyond the autumn, saying that an examination of the effect of the present price level over an entire year would give a better picture of the overall situation.
      Hyssälä notes that there is no single efficient way to fight the harm caused by alcohol.
      "Even in price changes we must take the neighbouring countries into account."
     
Prime Minister Vanhanen said that the prime ministers of the Nordic Countries will examine the situation together in November and "consider the possibility of taking some steps together".
      In Sweden, which has maintained relatively high prices on alcohol, a proposal was recently raised for a 40% cut in the alcohol tax to reduce personal imports from neighbouring countries. In Estonia, where alcohol is cheap by Nordic standards, there are plans for a 15% tax hike. Finland enacted its tax cut to discourage massive personal imports from Estonia when that country became a member of the European Union in May this year.
     
Liisa Hyssälä says that the most important matter is to protect children and young people against the harm caused by alcohol.
      Matti Rimpelä, research professor at the National Research and Development Centre for Welfare and Health (STAKES), said on Tuesday that the best way to do this would be to raise the price by "at least as much as purchasing power has increased; ten percent would be good".
      Rimpelä presented preliminary results of a school health survey. The questionnaires for the survey were distributed in April, just over a month after the alcohol tax cut had taken effect, but before restrictions were lifted on personal imports from Estonia.
      The survey found that repeated binge drinking among pupils in upper secondary school had increased "dramatically". Rimpelä says that the main factor in the surge is the ratio between the price of alcohol and the disposable income available to the youngsters.
     
Finland enacted an unprecedented cut in its traditionally high tax on alcoholic beverages at the beginning of March. The greatest reduction - 44% - was for strong spirits.
      For instance, the price of a half-litre bottle of Koskenkorva neutral spirits came down from EUR 14.35 to EUR 9.20. The tax on beer came down 32% and the tax on wine was lowered 10%. Ever since the price cuts were announced, there have been calls - including some from government ministers - to change the taxation system to favour wine and beer at the expense of hard liquor.
      The decision to cut the tax on alcohol was prompted by two main factors: the special dispensation that Finland got when it joined the EU, which allowed it to maintain restrictive quotas for personal imports from other EU countries, was running out at the beginning of this year. Already in January there was a small surge in travel to Germany - at that time the closest EU member state with significantly lower alcohol prices than Finland.
      The other factor was the feared "booze rally" of Finns bringing in cheap alcohol from neighbouring Estonia, when that country became a member of the EU at the beginning of May.
      The tax cuts have led to a considerable increase in consumption. Sales of strong alcohol at the Alko retail monopoly shops have gone up by about one third over last year.
      There has also been an increase in personal imports from Estonia, but it has not been as great as had been feared.


Previously in HS International Edition:
  Little support for quick rise in alcohol tax - liquor tourism to Estonia eases somewhat (10.8.2004)
  Alcohol rehabilitation clinics expect post-summer holiday rush (3.8.2004)
  Nordic alcohol survey: Sales of strong spirits highest in Finland (2.8.2004)
  Experts sceptical over impact in Finland of planned Estonian alcohol tax hikes (27.5.2004)
  Cheaper alcohol reflected in increased public drunkenness (5.5.2004)
  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)