1. Alcohol in
fiscal policies
Ismo Tuominen
Ministerial Councellor, legal affairs
Ministry of Social affairs and Health
Finland

2. Etunimi Sukunimi2 14.6.2013
2
Implementing ”Sustainable development”
USE BEST AVAILABLE KNOWLEDGE
 Ensure that policies are based on best available knowledge
and that they are cost-effective.
MAKE POLLUTERS PAY
 Ensure that prices reflect the real costs to society of an
economic activity and that polluters pay for the damage they
cause.

3. Etunimi Sukunimi3 14.6.2013
USE BEST AVAILABLE KNOWLEDGE
Evidence suggests that alcohol prices affect on the level of
alcohol consumption
 People increase their drinking when prices are lowered, and
decrease their consumption when prices rise.
 Heavy or problem drinkers are no exception to this rule.
 Economic studies demonstrate that increased alcoholic
beverage taxes and prices are related to reductions in
alcohol-related problems.
 Alcohol taxes can be used both to generate direct revenue and
to reduce alcohol-related harm.
 The most important downside to raising alcohol taxes is
traveller’s imports, smuggling and illegal in-country alcohol
production.
Babor et al.; Alcohol - No-ordinary Commodity

4. Etunimi Sukunimi4 14.6.2013
4
MAKE POLLUTERS PAY
 Production and trade of alcoholic beverages
+ 0,4% of EU GDP in 2004
 Health, social and economic burden of alcohol
- 1,3% of EU GDP in 2003 (total tangible cost)
- 0,9 %

5. Etunimi Sukunimi5 14.6.2013
The Finnish experiment on humans
2004 alcohol excise duties cut by 32 %
» 10 % increase in total consumption
» 20 % decrease in tax revenue
» annual increase of 600 alcohol-related deaths
2008-2012 four 10 % increases in alcohol excise duties
» 9 % decrease in total consumption (2012)
» 30 % increase in tax revenue (2012)
» annual decrease of 500 alcohol-related deaths (2011)

6. Etunimi Sukunimi6 14.6.2013
Alcohol consumption as pure alcohol per
capita, 2000–2012
17.4.2013 6
0
2
4
6
8
10
12
2000 2002 2004 2006 2008 2010 2012
Litres
Total consumption Documented consumption Undocumented consumption
tax -32 % tax 4x +10%

7. Etunimi Sukunimi7 14.6.2013
Alcohol-related deaths, 2000–2010
7
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2000 2005 2010
Violent deaths under
the influence of alcohol
Accidental deaths
under the influence of
alcohol
Accidental alcohol
poisonings
Main cause of death:
alcohol-related disease
tax -32 % tax 3 x +10%

8. Etunimi Sukunimi8 14.6.2013
The Finnish experience for alcohol in fiscal policy
– Alcohol taxation
 The most cost-effective and fast measure to reduce alcohol harm
 In general the higher the better - for health and for revenues
 Should rise at least at the level of inflation and income growth
– Regulating cross-border purchase and illegal market
 Limit traveller’s import quotas if possible!
= Don’t do as the EU has done ...
 At least moderate control on smuggling and illegal production is
needed.
– Minimum price regulation ?
 Could have significant impact on heaviest and youth drinkers, but
what is the difference between raising taxes ?
– Ban on sales below cost ?
 Difficulties in enforcement - no perfect solutions