Saturday, February 26, 2005
The Finnish Alcohol Tax Cut
Nearly one year ago Finland embarked on a new alcohol control regime, one featuring much lower taxes. The idea was that the anticipated accession of Estonia to the EU would create lower effective prices for alcohol in any case, so that lowering domestic prices would at least keep some of the tax revenue inside the country. Commenting on the tax fall last February, Vice Squad noted that "if the usual elasticities apply, we should see a surge in drinking in Finland."
And now we have. The linked article notes that the only surprise has been that there was a sort of price war among beer sellers; as a result, "[p]rices of medium strength beer have plummeted."