E-Malt.com News article: Finland: The Federation of the Brewing and Soft Drinks Industry condemns government’s intentions to increase alcohol tax on beers

The government’s new alcohol tax proposal seeks to increase the alcohol tax on beers, ciders and long drinks by 15%. This tax hike applies largely to the mild alcoholic beverages made by the domestic brewing industry; the tax on stronger alcoholic drinks will rise by only 10%. The bulk of the increases in the sweets tax impact on soft drinks, which are also made by the brewing industry. In addition, there is now talk of diluting medium-strength beer. This single domestic field of industry has to bear a disproportionate burden, Hartwall, the association of brewers and beverage producers of Finland, reported this week.


The tax increase will also lead to a rise in the value-added tax levied on the products. At present, taxes already account for 60-80% of the per-litre retail price of beer. The tax on beer was last increased by 10% in autumn 2009 and likewise by 10% in January of the same year. Following the proposed 15% increase, Finland’s beer tax would be almost 50% higher than in the EU country with the second-highest taxes (the UK).


In terms of alcohol policy, the higher increase in the taxes on beer compared to wines and spirits is in complete contradiction to the views expressed in public debates during the past few weeks. On the one hand, some parties wish to lower the alcohol content of beers sold in daily consumer goods stores, but on the other hand tax policy decisions encourage consumers to buy stronger alcoholic drinks. Strong wines are subject to the lightest taxes. For the most part, wines are imported – meanwhile, the domestic brewing industry is punished with the highest taxes in the EU, Hartwall said.


At the same time, tax hikes fuel private imports, which increase illegal trading in alcoholic drinks. The black market cannot be controlled. Further tax increases would make private imports even more affordable, as taxes would then be more than five times higher in Finland than in Estonia. The government proposal states that in 2010 accumulated taxes grew by only 6.4% as a result of the last 10% tax increase. Finnish tax policy measures favour Estonia, while the adverse effects are treated on this side of the Gulf of Finland.


As much as 15% of all the alcohol now consumed in Finland falls outside the statistics. Private imports by travellers are already substantially greater than total on-trade sales in Finland. According to a conservative estimate, at the current level of private imports, the Finnish government loses more than EUR 250 million in revenues from alcohol taxes every year.


The domestic brewing and soft drinks industry provides direct employment to about 2300 people. Indirectly, the industry employs more than ten times that number of people, when one includes the entire chain from the malting barley fields to the distribution chain and the bars and restaurants where products are sold to consumers. The domestic brewing industry now has even less room to manoeuvre. Furthermore, the sweets tax has the heaviest impact on the soft drinks and sugar-free mineral and spring waters manufactured by the brewing industry.


“One field of industry cannot be constantly treated as a cash cow. If operating conditions become too tough in Finland, we should keep in mind that the brewing industry enjoys a far more favourable production environment in Estonia. It’s clear that Estonia will become increasingly important as a brewing country in step with the growth in private imports by travellers,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.


“Lively debates on alcohol policy have been ongoing during the autumn. These discussions have pointed the finger at the brewing industry. Our industry is aware of its social responsibilities and wants to do its part in developing the Finnish drinking culture to favour moderate alcohol consumption.”


Hartwall, the Federation of the Brewing and Soft Drinks Industry in Finland, promotes the interests of producers of beer, cider, long drinks, soft drinks and mineral waters in Finland. Its members are Oy Hartwall Ab, Nokian Panimo Oy, Olvi Oyj and Oy Sinebrychoff Ab. The Federation of the Brewing and Soft Drinks Industry operates in connection with the Finnish Food and Drink Industries Federation and represents Finland’s fourth largest industry in the food and drink branch in terms of the value of production.


21 September, 2011