Page last updated at 17:17 GMT, Friday, 27 February 2009

Finland's u-turn on alcohol tax

By Branwen Jeffreys
BBC News health correspondent


Young Finnish people debate attitudes to drinking in the country, where the sale of alcohol is strictly regulated

Health ministers are describing drinking as the new smoking amid rising concern about the price of alcohol in the UK.

The Scottish government has suggested a range of radical measures, including a minimum price per unit of alcohol.

After a public consultation they are due to respond with more detailed proposals for legislation later this month.

The idea of minimum pricing is supported by medical organisations and charities, but opposed by retailers who say moderate drinkers would be unfairly penalised.

The Scottish government says the connection between price and consumption is backed by international evidence, including the recent experience of Finland.

Tax cut

In 2004 tax on alcohol in Finland was dramatically reduced, leading to price reductions of up to a third, depending on the type of alcohol.

Health campaigners say alcohol related harm visibly increased within the space of two or three years.

Alcohol tax in Finland was dramatically reduced
A change of government has since led to two increases in taxation, the most recent a 10% rise in January this year.

Finland has a heavy drinking culture and, like many countries who had a prohibition era, the sale of alcohol is strictly regulated.

Beer, wine and spirits that are more than 4.7% alcohol are sold via the monopoly chain of Alko stores.

In these stores any increase or decrease in government tax is directly passed on to consumers via prices, unlike the UK where retailers often absorb any extra duty imposed by the Treasury.

They are not allowed to discount alcohol via special offers.

Assessing the cost

At the National Public Health Institute they have been monitoring the cost of cheaper alcohol.

Professor Hannu Alho has first hand experience through his clinical work with patients in the nearby hospital.

He says after the tax reduction in 2004 alcohol related hospital admissions increased by around 10%, and the number of deaths connected to drinking also went up.

He said: "The trend is very very clear, you can see the increase in males and females, especially in young adults. That's very worrying".

Since 2005 alcohol-related problems have been the most common cause of death among Finnish people of working age.

According to official statistics the retail consumption of alcohol increased by 9.1% just in 2004, and has continued to grow in the subsequent years.

The increase was greatest in stronger alcohol where the tax and price reductions were also larger.

By 2006 sales through the Alko stores, and the selling of weaker beer through other shops accounted for 83% of total alcohol consumption.

Heath hazard

Binge drinking has long been considered a health hazard in Finland.

Timo Jaatinen, from the Federation of Brewers
The only way is to change the culture to teach people to use alcohol sensibly
Timo Jaatinen
Federation of the Brewing and Soft Drinks Industry
At a centre run by the independent A-clinic Foundation in Helsinki I spoke to one woman who didn't want to be named as receiving treatment.

She told me her drinking was no different from many of her friend, but it seems her employers disagree.

They had arranged for her to attend counselling sessions after she regularly called in sick on Monday mornings after drinking over the weekend.

This one clinic alone sees more than 1,700 people each year.

There is a long history of regulating the price and availability of alcohol but that has become harder to maintain.

Finland cut alcohol tax because of the economic pressures of the open market within the European Union and the European regulations allowing consumers to import alcohol for their own consumption.

When neighbouring Estonia joined the EU in 2004 it became easy for people living in southern Finland to make the short ferry trip to buy cheaper booze.

The tax cut was a response partly to the concerns of the alcohol industry.

Industry concerns

The vast Sinebrychoff brewery employs more than 1,000 people in Kerava, 30km north of Helsinki.

Thousands of cans of Finland's two most popular beers clatter along its production line each day.

The Federation of the Brewing and Soft Drinks Industry is worried that the more recent tax increases, aimed at limiting the health damage of alcohol, may instead threaten jobs here which depend partly on domestic sales of beer.

Timo Jaatinen, the director of the Federation, says last years 10% tax increase led directly to a similar increase in people bringing in cheap alcohol from Estonia or other neighbouring countries.

He argues price controls are a blunt instrument and the answer is better public health education.

He said: "We have a very long tradition of high alcohol prices but still we have many alcohol-related problems.

"The only way is to change the culture to teach people to use alcohol sensibly."

Government stance

At the Ministry of Social Affairs and Health it is clear experts do not agree.

Kari Paaso
If you decrease prices you increase problems and consumption
Kari Paaso
Finnish Government
Kari Paaso, a director for addiction related health problems, says while there are no immediate plans for further tax increases back to the pre 2004 level, he believes government policy will have to go further.

He says the link between alcohol price and consumption is accepted by the government, and he is convinced by the need for measures which target the whole population rather than the minority of extremely heavy drinkers.

"I would say this experiment Finland went through of big tax cuts - 33% on average - shows clearly that population-based measures are effective measures. If you decrease prices you increase problems and consumption."

A similar debate is likely to be heard in the UK in the coming months and years.

What happens in Scotland will be closely watched elsewhere.

The latest alcohol strategy for Wales supports the idea of minimum pricing, and the department of health in England is considering research it commissioned which looks at the potential policy impact of increasing pricing.

Any move towards minimum pricing would be applauded by public health experts, but fiercely opposed by retailers and alcohol producers.

The latter are likely to argue it is an unfair restriction which would flout EU legislation on competition.

The retail organisations argue that shops in Scotland would simply lose out to those over the border in England and a black market in alcohol would flourish.

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