Denmark: Recent tax reduction did not lead to lower beer prices - research

The recent reduction in the tax on beer and soft drinks in Denmark has not been passed down to consumers in the country, according to local research.

In July, the Government approved a 15% cut in the tax on beer and soft drinks in Denmark. However, a report by the country’s labour-run economic policy institute, Arbejderbevægelsens Erhvervsråd (AE), has claimed that, instead of reducing retail price, brewers have mainly used the tax cut to strengthen profit margins.

The Government had hoped the tax cut would bolster domestic sales and stem rising imports of cheaper beer and beverages from neighbouring Germany.

The AE’s latest August figures reveal a 0.1% decrease in beer prices for the month, while retail prices for soft drinks fell in the month by 0.5% year-on-year.

“It’s obvious that prices did not fall much, otherwise the general tax cut would be reflected in the prices paid by consumers in stores,” said AE analyst Frederik Pedersen.

11 October, 2013