Vanhanen welcomes prospect of Estonian alcohol tax hike

Prime Minister Ansip promises higher prices next year

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Centre Party leader Matti Vanhanen, who is likely to continue as Prime Minister when the next government is formed, has welcomed the prospect of an increase in the taxation of alcoholic beverages in Estonia. Vanhanen says that the move would have positive implications for Finland.
      Estonian Prime Minister Andrus Ansip announced plans to raise the liquor tax during the first question time of the new Estonian Parliament.
      "I am convinced that we will have to raise the taxes on both alcohol and tobacco to the level hoped for by the European Union already next year", Ansip told the newspaper Postimees on Thursday.
      The aim of the alcohol tax hike would be to reduce alcohol consumption in Estonia.
     
Vanhanen notes that Estonia's taxation of alcohol has an impact on the level of alcohol taxation in Finland as well. There was no detailed discussion on the taxation of alcohol in the ongoing government formation talks as of Friday. However, before the Finnish Parliamentary elections last month there was general agreement on a need to raise the tax.
      Finland cut its taxation of alcoholic beverages in the spring of 2004 when Estonia became a member of the European Union. Estonia's EU membership meant the elimination of restrictions on personal imports of alcoholic beverages from that country, and cutting the tax in Finland was seen as necessary in order to mitigate the prospect of massive growth in "alcohol tourism" to Estonia.
      The tax cut was followed by a surge in drinking-related problems in Finland.
     
Under Prime Minister Ansip's plan, the tax on tobacco is to be raised incrementally, so that the price of a package of cigarettes would rise from the present EUR 1.6 to EUR 3.
      The increase is to coincide with a planned tax increase by neighbouring Latvia, in order to reduce pressure for cross-border cigarette and alcohol travel.
      Estonia has postponed plans to raise tobacco taxes to the level called for by the European Union. Reasons for the delay include fears that such a move might spur inflation, and delay introduction of the EU currency, the euro in Estonia.


Previously in HS International Edition:
  Parliamentary parties ready for alcohol tax hike (14.2.2007)
  Alcohol abuse most common killer of working-age Finnish men (1.11.2006)
  Growth in alcohol consumption levels off; imports by tourists take a sharp dive (18.9.2006)
  Significant rise in overall alcohol consumption in Finland last year (25.2.2005)
  Consumption of alcohol bought in Finland increases by 7.6 percent in first half of 2004 (2.9.2004)
  Record liquor sales in Tallinn stores over weekend as Finns hoard cheap alcohol (3.5.2004)
  Little support for quick rise in alcohol tax - liquor tourism to Estonia eases somewhat (10.8.2004)

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