Study: Finnish travellers’ private imports of beer amount to 69 million litres annually

Every year, Finns buy 69 million litres of beer from abroad, mainly from Estonia and ships. This is twice the volume indicated by official interview-based surveys. As a result of travellers’ private imports, the State loses EUR 164 million in alcohol tax and VAT from beer alone. This information was revealed in a study conducted by Regioplan Policy Research and EY to analyse the impact of high excise duties and cross-border trade on the national economies of Finland, Sweden, Norway and Denmark.

The study indicates that high excise duties and large differences between the tax levels of neighbouring countries have an unfavourable impact on employment and the economy in high-tax countries. High taxes result in high consumer prices, which lead to a reduction in domestic sales and jobs, as consumers buy their beer from countries with lower price levels.

Finland has the highest excise duty on beer in the EU, and cross-border trade is a significant phenomenon. According to the study, 50.8 per cent of Finns buy beer from abroad due to high domestic prices. A large percentage of these Finns (74.6) buy beer from Estonia.

“Finland’s beer tax is almost five times that of Estonia’s, and this can be seen in the ever increasing volumes of beer privately imported by travellers. Beer sales in Finland fell by almost 13 per cent this April compared to April 2014, even though sales in the comparison period were record-breakingly low,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.

According to a report commissioned by the brewing industry in spring 2015, a total of 3,100 jobs have been lost throughout the industry’s ‘field-to-flagon’ chain in two years. Breweries employ 1,900 people directly and about 26,000 people in the entire chain. Beer’s impact on employment in the industry is about 55 per cent.

Tax increases = job losses

The study conducted by Regioplan Policy Research and EY indicates that the percentual increase in tax revenue from beer will not be nearly as much as the percentual increase in excise duty. The study examined State tax revenue from beer in relation to tax increases in EU countries and Norway.

Seventeen countries raised the excise duty on beer during the period in which the study was being conducted. In most of the countries that raised taxes (15), there was a reduction in jobs within the beer value chain. Tax revenue from beer declined in no less than eight of the countries that raised taxes. Tax revenue increased in eight countries, but the percentual increase was significantly less than the percentual increase in tax. In only one country did tax revenue rise in line with the increase in tax percentage.

In Finland, the excise duty on beer was raised by 8.2 per cent at the beginning of 2014, yet only a 4.4 per cent year-on-year increase in revenue was seen between 2013 and 2014.

Price differences between neighbouring countries also result in illegal imports of beer. The illegal import of alcoholic beverages has many unfavourable consequences, including the sale of alcohol to minors. The calculations performed for this study only include beer that has been legally imported by travellers.

In 2014, Regioplan Policy Research and EY studied the economic effects of high excise duties on beer. The countries studied were Finland, Sweden, Norway and Denmark. The study was commissioned by the Brewers of Europe.

Additional information:
Federation of the Brewing and Soft Drinks Industry
Managing Director Elina Ussa, tel. +358 (0)45 269 7711
Communications Manager Outi Heikkinen, tel. +358 (0)50 370 8677

Partner, Walter de Wit, Ernst & Young, tel. +31 6 2125 1881

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