Vice Squad
Monday, October 25, 2004
Swedish Alcohol Developments

Vice Squad has been tracking the possibility that Sweden will drastically cut its alcohol taxes, in the face of previous tax cuts in neighboring countries and EU rules that make importing for personal use easy. But not that easy: here's a story of a couple of fellows who ended up in jail when they couldn't explain the 2000 litres of alcohol that they were bringing into Sweden. It would be OK if it clearly were for personal use, or if they had other evidence that they were having a big party. But according to the article, "... it isn't acceptable to tell customs that "you're stocking up your reserves" or that it's been bought "for a large party"..." without supporting evidence.

The Swedish alcohol monopoly, enmeshed in a corruption scandal, is selling less because of the increased border trade -- another factor in making reduced taxes likely:
In September the Swedish Alcohol Retailing Monopoly recorded a 14.2 per cent drop in year-on-year sales. Sales of wine fell by 3.3 per cent, of beer by 4.7 per cent and of cider by 12.2 per cent. The drop in sales is most noticeable in Norrbotten and Skåne where consumers have the opportunity to buy cheap spirits in Finland and Denmark respectively.
Sweden is joining other countries (Finland, Norway, Iceland and Denmark) that have generally had tough alcohol policies and high taxes for negotiations with the European Union and the World Health Organization. Tight regulations do seem to work in terms of limiting consumption:
Norway, Sweden and Iceland, who charge the highest prices for alcohol, are also among the five nations in Europe with the lowest annual consumption of pure alcohol per person.

According to the WHO, people in Iceland annually consume just 4.41 litres of pure alcohol per person.

By contrast, Luxembourgers have the highest consumption with 14.47 litres per year per person, according to the WHO.
Norway, which is not a member of the EU, has the highest alcohol prices in Europe. But after Sweden lowers its taxes, Norway might feel pressure to follow suit, as the prospect of convenient, cheap imports will allow for avoidance of the high taxes.

Finally, the European Commission is coming after Sweden for taxing wine too highly, relative to beer. Why is the Commission sticking its nose into this business? Because most of the beer is locally produced, while most of the wine is imported, so the tax differentials might really be disguised protectionism -- which the Commission is tasked with fighting -- as opposed to a legitimate alcohol control strategy.

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