New Government Jumps Finland ahead of the Environmental Game | Drink Alcohol and be Taxed More!

Finland’s newly formed government has announced its agenda, highlighting environmental issues, job generation and social equality. The new programme aims to make Finland carbon-neutral by 2035. This goal makes Finland a top country in Europe in regards to aspirations for decreasing its environmental impact.

The programme makes massive promises and has left many wondering wether it is too ambitious. The EUR1.2 billion needed to implement all the “improvements” has to come from somewhere. To increase revenue the government, lead by Prime Minister Antti Rinne (SDP), aims to increase taxes by EUR750 million.

Sinners Be Damned

Some of that EUR750 million in additional tax revenue will come from a so-called ‘sin tax’ which includes tax hikes on tobacco, alcohol and sugary drinks.

Yle News calculated that alcohol tax would mean that those winenistas consuming a bottle of wine per week would see their spending increase by about EUR10.92 per year. This could potentially increase ‘booze rallies’ to Estonia, which recently decided to lower its alcohol tax by 25% in order to increase foreigners’ alcohol spending in Estonia. Even before the alcohol tax hike, booze in Finland is substantially more expensive compared to Estonia. For example one bottle of Australian Yellow Tail Shiraz costs €10.54 in Alko and just €2.60 in Liviko store in Estonia.

Despite booze being substantially cheaper in Estonia even before the tax reduction, which will be implemented on July 1, 2019, Tallinn is concerned over revenue losses from alcohol sales to Finnish travelers. Just two years ago Estonia hiked its alcohol tax by 70%, which made many residents of Finland travel further south to Latvia for cheap booze.

“[Following the tax increase] Estonia lost a third of their alcohol tax revenue last year, mainly to Latvia.” Managing director of the Finnish Grocery Trade Association (PTY), Kari Luoto, said to Yle News.

Estonia’s new tax reduction might have a limited impact though since Latvia may follow suit, according to Bloomberg.

The Institute for Health and Welfare (THL) calculated that Finnish travellers imported the equivalent of 7.1 million litres of pure alcohol in 2018. In 2017 this figure was 6.9 million litres. It is yet to be seen if Estonia’s tax reduction and Finland’s tax hike will increase the level of imported alcohol in 2019.