Vice Squad
Saturday, April 03, 2004
Intra-EU Alcohol Trade Developments

At the beginning of March, Finland markedly reduced its taxes on alcohol, in recognition of Estonia's coming accession to the European Union and the EU's liberal policies regarding internal trade for personal consumption: without a tax decrease, Finland expected a surge in what is already a sizeable trade, that of alcohol imports by Finns traveling to Estonia. (Vice Squad looked at the Finnish story on February 29, March 4, and March 13.) One of the sectors adversely affected by the tax cut has been the Party Boats that roam the Baltic between Helsinki and Tallinn. These boats are allowed to sell tax-free liquor, and they were the source of many of the alcohol imports that Finns brought back from Estonia. The boats are facing a triple whammy, in that they now must compete with the lower prices in Finland, fewer Finns, presumably, will be interested in making the trip to Tallinn in the first place, and once Estonia is in the EU, they will not be allowed a tax-free shop. According to this article in the Moscow Times, "All major firms sailing the Baltic Sea have cut their liquor prices from 25 percent to 45 percent in the wake of the new tax rate, looking to keep their stretch of sea one of the busiest in the world. Over 15.7 million passengers sailed to and from Finland in 2002."

Meanwhile, the European Commission is pressuring for a more liberal interpretation of "personal use," in a way that would probably encourage increased alcohol imports from France and Belgium to the UK. From this article in The Scotsman:

"According to EU guidelines, anything up to 800 cigarettes, 400 cigarillos, 90 litres of wine (including a maximum of 60 litres of sparkling wine) and 110 litres of beer is deemed for personal use, although national authorities should consider 'individual circumstances' when carrying out checks." 110 litres! The Commission suggests abolishing the guidelines for alcohol in their entirety, but proposes maintaining the tobacco indicators for health reasons.

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