Vice Squad
Saturday, January 12, 2008
Outlawing Volume Discounts For Alcohol

A few years ago, the impending entry of Estonia into the European Union led Finland to pre-emptively lower its traditionally high alcohol taxes. One result was a sharp rise in alcohol-related problems. This year, Estonia raised its own alcohol taxes, so Finland felt that it had scope to do the same thing. When the tax rise went into effect on January 1, other new alcohol rules also were adopted, including the abolition of cheaper per-unit prices for larger purchases of alcohol (so that a bottle of wine cannot sell at a restaurant for less than the equivalent amount of per-glass purchases). Vice Squad had suggested months ago that the response to such a rule might be a fall in the price of the smaller units, instead of a rise in the price of the larger units -- and that is what seems to have happened:

In an effort to raise the prices of beer sold in crates and cardboard packs, the government introduced a regulation at the beginning of the year saying the price of a bottle or can of beer sold as part of such a pack could not be lower than that of cans or bottles sold singly.

The result was a fall in the price of beer sold by the bottle and can.

So the Finns are talking about raising the beer tax some more, to make sure that effective retail prices are higher, not lower, than before the no-volume-discount regulation.

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