08 Jan Taxation is on the way of Finland’s’ sobering.
Transferring all alcohol to Finnish alcohol monopoly Alko would decrease consumption by 6-12% and would drop alcohol deaths with 360 per year. The prohibition of beer in supermarkets would also turn Finland’s economic distress into a crisis.
According to the research by The Government Institute for Economic Research (2011) Finland’s alcohol usage would drop around 6-12 % if the country would follow Sweden’s example and would transfer all alcohol over 3,5% to the Finnish alcohol monopoly Alko. The change would drop alcohol deaths on average 350 per year and would have remarkable health benefits to the population.
Compared to the fairly small population of 5 million, the alcohol consumption has been soaring for years, causing Finnish alcohol death rates be second largest of the Nordic countries. According to Statistics Finland, alcohol-related causes killed 1,900 people in 2013 and 1,300 in 2014. Helena Suojanen, an occupational health physician confirms in an interview, that getting drunk is the biggest part of Finnish drinking culture.
“People won’t recognize the problem in time and they became dependent on alcohol,” she explains.
Finland has tried to control its ascending alcohol usage and changing taxation for years. In 2004, Finland reduced alcohol tax with about 32% trying to keep Finns from traveling to Estonia for cheaper alcohol. The reduction backlashed and Finland stumbled into a major health crisis. Statistics Finland shows that in 2005 alcohol was the leading cause of death to working-aged men, killing 1 309 of 15-64 years olds. Even after rising in taxes, alcohol killed about five Finns in a day in 2012, according to MTV (2013).
Compared to its Scandinavian next-door neighbour Sweden, Finland uses 77% more beer than Sweden and consumes 56% more pure alcohol than them, according to Nationmaster (2011) and Who (2011-2014). In addition, Statista database informs that Swedes enjoyed about 50 litres of beer in 2013, while the same year, Finns consumed 80 litres.
But what is so different in Sweden?
Unlike Finland’s alcohol monopoly Alko, Sweden’s Systembolaget sells everything with more than 3,5% alcohol, including beer, with an age limit 20. Supermarkets are only allowed to sell beverages under 3,5%.
In Alko, age limits differ from 18 to 20, depending on the alcohol percentage. Contrary to Systambolaget, Alko only sells everything over 4,7%. Everything with fewer percentages is sold in supermarkets.
Stated by the Government Institute for Economic Research in 2011,
Sweden reduced their alcohol consumption 12-15% after transferring beer to alcohol monopoly in 1977.
The Government Institute also calculated that Finland’s consumption would decrease majorly if the country would follow Sweden’s footsteps.
“I believe that easily available alcohol persuades to drink. Is it necessary to get beer around the clock with same principles than with medicines from pharmacy?” Päivi Hokuni, an occupational health care doctor, questions, “It would be necessary to get time limits for selling alcohol – or beer should be diluted.”
A Finnish Centre Party Keskusta had alcohol reduction in their political agenda at the beginning of the political year 2015. Their proposal suggested that the Swedish alcohol example could be transferred to Finland to diminish the alcohol-related problems more efficiently.
The proposal gained a lot of attention in the media and Centre party dropped the proposal in February after a critical reception.
But what was the reason the party dropped one of their proposals?
Finland is living in a time of economic distress. Not far behind Greece, the government is depending on many things, including high taxation.
In a case of alcohol usage dropping on average 9%, Finland would lose significant money out of its taxation. The Finnish alcohol taxation is EU’s highest and it provides Finland roughly a profit of 1 205 million euros per year according to Statistics Finland(1998-2005) and Government Budget Estimates (2013). The country tried to cut down the drinking problem with higher taxation after the relapse in 2004.
“Tax policy is a good try to change the drinking but it hasn’t worked out so well. People make home made wines and home-brewed beer if they don’t have enough money to buy some and they want to drink. But of course high taxation makes a positive change to the major usage.” Suojanen clarifies.
According to a Finnish daily paper Iltalehti (2014) an average Finn spends about 999 euros to alcohol each year. Half of the consumption is from beer bought from supermarkets.
According to European Commission, beer taxation brought 609 million euros to the country in 2014.
It is clear that in a case of following Sweden’s example, the store-bought beer consumption in Finland would collapse and taxation would suffer great damage. After the tax rises during the last years, a brewery company Panimoliitto (2015) counted that the taxation makes about 60% of the beer can’s price.
According to Pellervo’s economic research (2013), the price for beer would rise over 41,7 % if it would be transferred to ALKO. According to their statement, the taxation’s income would drop about 130 million euros. According to Panimoliitto, this wouldn’t be the only loss what Finland would suffer if alcohol prices would increase,
“When prices in Finland rise, the feared outcome is a rush to buy cheap beer in Estonia. According to research, private imports of beer totaled 34.8 million liters in 2014, purchased mainly in Estonia and on ships.”
In the feared case, Finland would lose all its alcohol income to cheaper neighbor Estonia, and the local breweries would suffer. Traveling-and restaurant Deputy Company Mara explains in daily paper Helsingin Sanomat (2014) that after raising the alcohol taxation during last years, Finland was left 93 million euros short of the government’s budgeted plan, after cheaper prices drew Finns to Estonia. “Rising in taxation would increase the liquor transportation from Estonia for sure,” Veli-Kristian Berglund, bachelor of economic sciences and an entrepreneur, says, “It would affect taxation very negatively. The movement might be possible to control if Finland could tighten its importation prohibitions but EU doesn’t allow this.”
The Finnish economy is in crisis after failing to keep up with the rest of the world’s exporting, Agenda, world economy forum confirms. Even though Finland is already trying to cut alcohol usage for serious health reasons, a drastic reduction in alcohol sales would push the country in to more debts.
Is fear of financial losses from alcohol cuts keeping Finland from its sober future? A source in Finnish Financial times Talous Sanomat (2013) claims that drinking costs the society over billion euros. According to their statement in the newspaper Finland has about 200 000 people with serious alcohol problems. About 140 000 of them are workers and cost the government 1,3 billion.
The money got from alcohol tax can’t cover the health spending used to alcohol problems. A quick drop in the consumption would help to deal with the health issues.
“I don’t really see another alternative than raising taxation again.” Suojanen confirms.
Jari Tiihonen, a juridical psychiatrist professor in tells in Savon Sanomat (2010) that he supports transferring beer to Alko and believes that cutting down beer consumption could solve the problems.
“If you can reduce beer consumption with even 10 per cents health issues and health costs would reduce right away,” he explains.
But is the government ready to make sacrifices to get the alcohol problems down? Transferring all alcohol to Alko would be a high risk to take. Treating the problems of alcohol usage would continue to far future but the money would be cut majorly. Would lose in the taxation be so significant that Finland would lose more than it could handle? “We already lost Nokia. We can’t suffer any more financial losses,” says Tapani, 51.
About half of the interviewed Finns would not like to pay more of their alcohol if it would be transferred to Alko. To Minna, 19, the biggest tax rise she could take would be 10%. “The price right now is a maximum,” She clarifies. Mari, 33, agrees, “I wouldn’t pay any more than it is now. You can already see it in the receipt afterwards.”
Those who didn’t mind the alcohol prize being raised said that they would pay maximum 5€ per alcohol portion. Most of the questioned didn’t believe that transferring beer would help with the problems. “Those who drink will always drink, no matter what,” Silja, 65, says.
It’s a fact that the number of taxation money that would be lost would be significant, but the alcohol reduction could save a life of about 350 persons in a year and would make magnificent health changes to the entire population. It is an opinionated question about which is the bigger bad for Finland. “I don’t know how taxation rise would influence Finland’s economy or budget. I think that health is more important than finance,” Marjaana Berglund, a specialized nurse defends. An economic, Veli-Kristian Berglund disagrees, “It’s been noticed that restricting alcohol with taxation, laws or availability only leads to an increase in Estonia’s sales. It doubles the problems.” He continues, summing up the taxation problem, “While all the tax money goes to Estonia Finland can’t afford to treat its own problems. Sweden’s example would never work in Finland.”
