Benelux: Cross-Border Alcohol Issues
Belgium has increased alcohol taxes further, aiming to reduce alcohol harm in the country, but the measure is not as effective because of cross-border trade with Luxembourg.
Officials have increased the excise duty on wine and spirits from 31% to 41% in Belgium. The government intends to increase their tax revenues and decrease alcohol consumption and harm through this measure.
However, neighboring Luxembourg’s rock-bottom alcohol prices are posing a challenge for Belgium’s public health policy. One in two Belgians are reported to live less than 50km away from a border. So, Belgians are going to Luxembourg and France to buy their alcohol.
The cross-border trade has cost Belgium €120 million. In 2016, cross-border trade reached as high as 250% in Belgium, leading to rising consumption levels.
Luxembourg passed a national alcohol plan earlier this year, which unfortunately did not include a tax increase. The case for not increasing alcohol taxes is that as the country is rich there would be no effect from increasing alcohol taxation. This stance is contradictory to the World Health Organization’s evidence-based, proven cost-effective alcohol policy best buys which include taxes. Despite what the Luxembourg government thinks, it has been proven, globally that tax increases lead to consumption reductions.
Further, increasing taxes is not only affecting Luxembourg alone, in this case as Belgium is suffering health and economic loss because of the low tax and price of alcohol in Luxembourg.
It is highly important for countries in close knit regions to have congruence in their alcohol pricing and taxation. One country having rock-bottom prices for alcohol is a threat to all countries in the region. A prime example can be seen in the the alcohol tax war which enfolded last year in the Baltics.