Finland recently decided to bring down its taxation of alcohol. The decision was made rather quickly and with little public debate compared to the situation in neighbouring Sweden.

   

When the two countries joined the European Union in 1995 both countries were allowed to temporarily retain tighter restrictions on the personal import of alcoholic beverages from other EU countries than was the norm in the rest of the EU. From the beginning of this year permission for the tighter quotas expired.

   

While Finland decided to sharply cut its alcohol tax as of March this year to decrease pressure for massive imports of cheaper drink from other member states, Sweden is adhering to its policy of high prices.

While the decision to cut the alcohol tax was made fairly quietly in Finland, Sweden has been mired in an intense public debate. Many Swedes are lamenting the impact that the tax cuts enacted by their Nordic EU neighbours, Finland and Denmark, will have on them.

   

Sweden fears that its citizens will start bringing in cheaper drink by the carload from Finland and Denmark. Denmark's tax cut, which took effect already in the autumn, has already been accompanied by a 20% decline in sales at the southern sales outlets of Systembolaget, Sweden's state-run alcohol retail monopoly.

   

Politicians are also concerned about the impact that the even cheaper prices of the new member states will have.

Finland and Sweden have adopted two quite different strategies. While Finland is trying to ease pressure by cutting taxes, Sweden is waiting to see if it really proves necessary.

   

Swedish Finance Minister Bosse Ringholm opposes any tax cuts. He has said that Sweden wants to look and see what the impact of the neighbours' new decisions will have on Sweden, and to take up the issue in connection with the next budget debates, if necessary.

   

While some individual politicians in Sweden support a tax cut, most parties, with the exception of the conservative opposition Moderate Party, are against it.

   

Some of the opponents of a tax cut are ideologically opposed to any change, while others concede that such a move may prove necessary. The latter view is gaining ground, and is already supported by the Systembolaget management, a state rapporteur on alcohol policy, and a majority of the people.

   

Bosse Pettersson, deputy director-general of Sweden's Public Health Institute, wants to keep high prices as a way of keeping consumption down. Pettersson predicts that the health problems caused by alcohol will get worse in Finland because of the upcoming tax cut.

   

Christoffer Tigerstedt, a researcher at STAKES, the National Research and Development Centre for Welfare and Health in Finland, notes that the price difference between Finland and nearby Estonia is greater than that between Sweden and Denmark. The main aim of a cut in the alcohol tax in Finland was to head off an expected surge of cheap personal imports from Estonia when it joins the EU in May.

In a newspaper article last week, four Swedish government ministers explained what the government plans to do to deal with the pressures caused by lower alcohol taxes in neighbouring countries.

   

The four promised to focus more on education on the harm caused by alcohol, and to enact tougher punishments for bootleg sales and driving while intoxicated. They also want to push for a minimum tax on alcohol within the EU.

   

A number of Swedish experts question the effectiveness of education campaigns, and note that changing tax policy in the EU as a whole is very difficult.

   

Pettersson nevertheless feels that awareness of the hazards posed by alcohol to public health will spread in the EU.

Sweden has the lowest per capita alcohol consumption rate in the EU, and the lowest rates of alcohol-related illnesses and deaths. Politicians in Sweden see this as an indication that their policies are working.

   

However, developments are a cause for concern: alcohol consumption is rising. In the past two years consumption has increased by nearly one fifth, and is at the highest level in over 100 years.