Finns call for 25% tax hike on alcohol as EU presidency begins

A TAX hike on alcohol of at least 25% will be the first item on the agenda for the Finns who took over the EU presidency this week.

The tee-total Finnish Prime Minister Matti Vanhanen made his case to the European Parliament for harmonising the amount of money states add to the price of drink.

However, it is not thought that the proposal will affect Ireland because of our high excise rates.

The minimum excise rates agreed by EU members have not been updated since they were first agreed in 1992 and Finance Ministers will next week consider increasing it by 25% to bring it into line with inflation.

“The aim of the Finnish presidency is to raise the EU minimum excise duty rates on alcohol, particularly with regard to spirits,” he said.

The Government is not expected to object since Irish excise duties are among the highest in the EU and much higher than the minimum in operation.

Irish duty on beer and wine is the second highest in the EU, while duty on spirits is the fifth highest.

Finance Minister Brian Cowan refused to reduce the rates in his last budget despite pleas from the Vintners Federation.

Proposals expected to come before him and the other EU Finance Ministers next week would add a fraction of a cent to the excise duty imposed on beer and spirits in some EU countries.

There is no minimum for excise duty on wine and Ireland was accused in the past of breaching EU law by imposing the tax on wine.

Finland is particularly anxious to increase the cost of alcohol, especially in Estonia, its close neighbour, where spirits are a fraction of the price.

This resulted in a huge increase in the amount of alcohol tourism with Finns shopping in Estonia, hitting the sales of the state-owned alcohol shops in Finland.

The Finns responded in 2004 by slashing the taxes by 40% but this was blamed for a major jump in consumption and a 20% increase in alcohol related deaths.