Scotsman (Scotland) – Finnish experience suggests price can have strong effect

  • Post category:World News

The Finnish experience is one which has influenced opinion- formers who have argued vociferously that the price of alcohol has a strong effect on consumption. In Finland, tax on alcohol was cut six years ago, leading to price reductions of up to a third, depending on the type of alcohol.

The reduction in price was accompanied by a visible increase in alcohol-related harm within two or three years.

Alcohol-related hospital admissions increased by 10 per cent and the number of deaths connected to drinking also went up.

A change of government has since led to two increases in taxation, the most recent a 10 per cent rise in January.

This has led to a fall in consumption. Today, the sale of alcohol in Finland is strictly regulated.

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

Alko is owned by the government, allowing ministers direct control over the price of strong liquor.

The government also tries to influence drinking culture by encouraging the sale of wine, rather than hard spirits. 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.

Canada offers the most direct comparable example of the minimum pricing envisaged by the SNP. Both federal and local governments have the authority to vary drink prices. Provincial governments can operate so-called “social reference pricing”, which means that authorities can set some sort of minimum or “floor” price.

Schemes involving social reference pricing exist in eight of the 13 jurisdictions. Some provinces link price to the volume of drink bought. Others link it to alcoholic content of the drink.

Source: Scotsman (Scotland), 23/09/10