Article
Authors: Horverak Øyvind , Österberg Esa 
Published: January 2018

Øyvind Horverak & Esa Österberg: Trends in alcohol taxation and prices in the Nordic countries in the 1990s

This article provides a comparative description of alcohol taxation in the Nordic countries today. In addition, it looks at how the duty system and the level of duties have changed since the early 1990s. With the exception of Denmark all distilled spirits and wine and partially also beer were sold in state owned monopoly liquor stores.

There have been major changes over the past decade in the way that alcohol is taxed in the Nordic countries. Nowadays both the Nordic EU members states, Denmark, Finland and Sweden as well as Island and Norway which participate in the European Economic Area agreement have adopted their alcohol taxation systems to EU standards. The most important change has been that the alcohol duty is no longer connected in any way to the price of the products but only with their alcohol content inside different beverage categories. In a 1992 directive on the harmonisation of the structure of excise duties on alcohol and alcoholic beverages, the EU Commission set out its guidelines concerning the allocation of different alcoholic beverages into different beverage categories. A distinction was made between four product groups: beer, wine, intermediate products and distilled spirits, with definitions based primarily on customs tariff bands.

In 1991 the level of alcohol excise duties in Denmark was markedly lower than in the other Nordic countries, whereas the duties in Finland and Sweden were more closely in line with the figures recorded for Iceland and Norway. Te n years ago the Nordic countries could most appropriately be divided into two different tax regimes, with Denmark representing one and the remaining Nordic countries the other. During the study period alcohol excise duties have been lowered in Denmark, Finland and Sweden whereas they have been kept about the same in Iceland and been increased somewhat in Norway. Therefore, today it is fair to say there are three different alcohol tax regimes in the Nordic countries: the Danish version, the Finnish-Swedish regime and the Icelandic-Norwegian one.

As can be expected the lowest prices for alcoholic beverages in the Nordic countries are to be found in Denmark, which also has the lowest alcohol excise duties. As a rule alcohol prices are the higher the higher the alcohol excise duties. However this is not true across the board and without exception, in fact the prices of wine in Sweden are at the same level as in Denmark. This means that the Swedish Systembolaget, from the consumer's point of view, is a more efficient distributor of alcohol than are the Danish markets. This is even more clearly seen when we look at alcohol prices without taxes. Then we notice that with the exception of the sparsely populated and remote Iceland, prices of wine and distilled spirits are lower in the Nordic monopoly countries than in Denmark. With respect to beer the Danish market is the most effective. Overall our examination of price trends indicates that there are no grounds to argue that the system of alcohol retail monopoly means consumers have to pay more for their drink. On the contrary it seems that quite the opposite is true, that retail monopolies help to reduce prices of alcohol.