Thursday, February 24, 2005
Swedish Alcohol Tax Cut Must Wait
European Union alcohol rules and EU expansion have made it harder and harder for strict alcohol control countries in the EU to maintain their relatively stringent policies. As a result, both Denmark and Finland have cut their alcohol taxes significantly in the past year or so. Sweden has been holding out, but for some time now has been signalling a 40 percent cut in taxes on spirits (as opposed to wine and beer). In November we learned that the tax cut would be put off until at least the spring, and today we learn that any such move will be postponed until this fall.
Vice Squad (or at least my part of it) is not opposed on principle to high taxes of "vicious" goods; I have also signaled my concern that it is not necessarily a good idea to let international trade policy trump national vice policies: that is, neither a good idea for the long-run prospects of free trade, nor for promoting desirable vice policies.