The alcohol tax is not indexed in Sweden and was last increased in 2017. This means that alcohol has become cheaper in relation to Swedes’ purchasing power, inflation and rising wages over the last years. This reasoning was provided by the Swedish Minister of Finance to justify the need for an alcohol tax increase.
IOGT-NTO, a Movendi International member organisation, reports that the alcohol tax has remained at the same level for many years and was raised extremely modestly in 2014, 2015 and 2017. Compared with 1995, the alcohol taxation level in relation to people’s income has fallen for beer, wine and liquor by 32%, 22% and 15% respectively.
More affordable alcohol also means more consumption – or that alcohol use is not declining at the rate it should – and more alcohol-related harm and costs.
Movendi International has previously reported on the widening gap of alcohol prices between Sweden and neighboring Norway. For example, the taxes on a liter of ordinary liquor with 40% alcohol content, were at NOK247 ten years ago. In 2020 estimations are the fees will be NOK66 higher, amounting to more than NOK300. In Sweden, the tax on the same bottle was SEK201 ten years ago, and is estimated to only be SEK207 in 2020.
This problem was exacerbated as Systembolaget, the alcohol retail monopoly in Sweden, reduced prices of their cheapest alcohol in December 2019.
The reasoning cited by Systembolaget for this price decrease was to reduce cross-border trade of alcohol. This is one of the anxieties of Sweden when it comes to alcohol tax increases as well. However, such fears are unfound as Sweden’s last three tax increases have reduced alcohol consumption, brought in more money for the Treasury while border trade in alcohol has continued to decline.
Sweden is about to lag behind in alcohol policy. In concrete terms, this means that there are a number of violent crimes that are not prevented and children who grow up in insecure homes,” says Irma Kilim, head of drug policy at IOGT-NTO, as per IOGT-NTO Comments.
That an alcohol tax increase is finally announced is therefore very welcome.”
Irma Kilim, head of drug policy, IOGT-NTO
Before reducing the prices a report released by Systembolaget itself in November 2019 found that alcohol costs Sweden about SEK 103 billion annually amounting to 0.2% of Swedish GDP. The report showed that alcohol harm burdens the healthcare and social welfare system, the economy and productivity, the judicial system and police, as well as people’s quality of life.
Recent studies by Karlsson in May, 2020 and Karlsson and colleagues in April, 2020 on Swedish people’s opinion of alcohol control has shown that they view alcohol as a societal problem and are in support of improved alcohol policy solutions. In this context, the planned tax increase will be welcomed by most Swedes and will help to reduce the alcohol cost to the society.
The next step for strengthening alcohol tax in Sweden would be indexation.
Now that health care workers have run marathons and society needs money to rebuild the economy, alcohol policy can play a small but important role,” says Ms. Kilim, as per IOGT-NTO Comments.
The increase in 2023 goes a long way. Permanently indexing the alcohol tax would be a natural step before the next budget and could strengthen healthcare.”
Irma Kilim, head of drug policy, IOGT-NTO
Sources
Regeringskansliet (The Swedish Government Office): “The tax on alcohol and tobacco will be increased from 2023“
IOGT-NTO Comments: “INCREASED ALCOHOL TAX FROM 2023“
