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Government Can't Decide on Alcohol Tax Hikes

Government continues to dispute whether it ought to raise the alcohol tax again.

On Tuesday, a government working group failed to reach consensus on alcohol tax levels.

Velipekka Nummikoski, the chair of the working group, says the Centre Party and the Greens want to increase the tax. However the conservative National Coalition and the Swedish People's Party want to hold off on tax hikes until they get proof that higher taxes actually lower alcohol consumption.

At the start of the year, tax on hard liquor shot up 15 percent in Finland, while tax on other alcoholic beverages rose 10 percent. Domestic alcohol sales have fallen 1.1 percent following the tax hikes. However personal alcohol imports from abroad grew by 7.1 percent. The total consumption of alcohol also increased slightly, by 0.2 percent.

According to Nummikoski, the National Coalition and Swedish People's Party want to know whether the tax increases lower alcohol consumption or just lead to more alcohol imports.

"If people are bringing in more alcohol from abroad, then tax revenue also goes to other countries," he points out.

Nummikoski also says that new rules on tobacco imports could affect alcohol imports. Currently, neighbouring Estonia's tobacco tax falls below the EU minimum level -- allowing other EU countries to set limits on tobacco imports from Estonia. However Estonia plans to increase its tobacco tax, meaning Finland will be forced to do away with restrictions on tobacco imports from its neighbour.

It's still not known when Estonia's tobacco tax hikes will occur, but Nummikoski says Finland ought to consider the matter. He says alcohol imports could increase when more people travel to Estonia to load up on cheap tobacco.