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Finland's alcohol tax may rise next year

Minister of Finance Matti Vanhanen says an increase will be on the table in upcoming government budget talks.

Superalko alkoholimyymälä Tallinnassa Virossa 21. heinäkuuta.
Traveller imports accounted for about 14 percent of alcohol consumption in Finland last year. Photo from the Superalko shop in Tallinn, Estonia on 21 July. Image: Heikki Saukkomaa / Lehtikuva

An increase in taxes on alcoholic drink may be seen in Finland next year.

The programme of Finland's current coalition government calls for an additional 50 million euros in revenues from the taxation of alcohol, and this could well mean a tax rise in 2021, Minister of Finance Matti Vanhanen (Cen), has told the Finnish news agency STT.

Alcohol taxes were not raised last year, and the government program does not specify the exact timing of the planned increase.

Vanhanen now says that a timetable for rolling out higher taxes on alcohol will be under discussion in the cabinet's next round of budget talks.

The government's program notes that part of the decision-making process should be the impact of imports of alcoholic drink by travellers. This year, those imports were completely on hold because of travel restrictions due to the coronavirus.

Tax cut in Estonia

Estonia is a popular destination for many Finns looking to stock up on cheaper booze.

In July 2019, Estonia cut its excise duty on alcohol by 25 percent in order to curb imports of alcohol from across its southern border with Latvia.

Last year, imports by travellers accounted for about 14 percent of alcohol consumption in Finland. Most alcoholic beverages are imported from Estonia, while imports from Latvia have also been on the rise over the last two years.

Imre Poll, the chain manager of the Estonian alcohol retailer Superalko, says that after the tax cuts, sales have risen back to the previous levels seen before a decline that started in 2017.

Superalko has more than 30 stores in Estonia and a few outlets in Latvia.

“Travel to to Latvia [to buy alcohol] was clearly seen. After the tax cut, sales returned to normal and now have remained that way,” Poll told STT.

Falling sales in Finland

Last year, travellers brought more low-alcohol content drink and fewer spirits to Finland than in the past, according to a report by the National Institute for Health and Welfare THL.

The number of passengers importing alcohol and the average volume in litres imported remained at the same level. However, when calculated in terms of pure alcohol, imports fell by 12.4 percent.

This can be attributed to an increase in imports of beer and light wines.

Alcohol sales in Finland decreased last year and continued down by 8 percent in terms of volume during the first six months of this year. According to THL, total consumption was also down.

With the lifting of travel restrictions between Finland and Estonia, many Finns are again travelling south across the Gulf of Finland, but fewer than before the beginning of the epidemic.

In June, the number of Finns visiting Estonia was only a third of the total registered during the same month of last year.

July figures have not yet been released, but locals in Tallinn says that Finns have been much more in evidence in the city over the past few weeks.

Poll says that sales at the Superalko at Tallinn harbour, where a large portion of the customers are Finns, are back up to last summer's levels. During the period of travel restrictions, Superalko saw its sales fall by about 20-30 percent.

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