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Rise in alcohol tax sharply divides opinion

The government’s decision Thursday to increase taxes on alcohol and tobacco has met with mixed responses from opposing camps.

Kuvassa olutpulloja.
Taxes on beer in Finland are the highest in the EU. Image: Joona Korpi / Yle

The Federation of the Brewing and Soft Drinks Industry (FBSDI) is wondering why they are being punished with the new tax hikes, while the Substance Abuse Prevention Association (EHYT ry) says that fears of “booze tourism” to neighbouring countries are overstated.

According to EHYT's Director, Sari Aalto-Matturi, the increased rate of taxation strikes a reasonable balance between between economics and health and well-being.

“In recent years increases on alcohol and tobacco products have been a success story, the continuation of which is welcome.” says Aalto-Matturi.

The FBSDI condemned the government’s announcement as soon as it was made on Thursday. The Federation considers it unreasonable to instigate a new hike, which will be the fifth since 2008.

According to the Federation, the increased cost to consumers will send them flocking to nearby Estonia to purchase alcohol. According to them, at present the Finnish government loses over 300 million euros a year in tax revenue per year due to private passenger imports of alcohol from abroad.

Is increased booze tourism a myth?

“Trade is shifting increasingly to Estonia,” says FBSDI’s Director, Elina Ussa. “However, the disadvantages are dealt with in Finland.”

EHYT believes that concerns regarding passenger imports are being exaggerated.

Aalto-Matturi says that long-term follow-up data on passenger imports does not show an increase of such activity, in fact, rather the opposite. Her argument is that claiming that so-called “booze tourism” is a rising phenomenon ignores statistics that indicate both its decrease, and similarly decreasing levels of substance abuse in Finland.

Meanwhile, the FBSDI is also concerned about jobs. According to the body, the industry employs almost 30 000 people, when taking into account the entire chain – from farm to thirsty consumer.

Ussa wonders if the alcohol industry is being punished, highlighting the fact that the taxation rate is the highest in the EU.

Meanwhile, the Substance Abuse Prevention Association also acknowledges the importance of the issue in terms of labour. The body is keen to point out that alcohol is in many ways a factor in shortening working life.

Five to seven percent of disability pensions are quite directly attributable to alcohol related problems Aalto-Matturi says.

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