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Tuesday 2 September 2014

Norway considers 5% booze tax increase

5th August, 2013 by Patrick Schmitt

A proposal to raise Norway’s taxes on alcohol even higher has been leaked to the country’s largest commercial television station.

Norway has the second highest taxes on alcohol in the world after Iceland

Plans to increase taxation on drinks by 5% in next year’s budget were outlined in a pre-budget report by Norway’s Ministry of Finance, which was picked up by the country’s TV2 station.

The document justified a proposed 5% tax increase with information to suggest such a rise would reduce Norway’s alcohol consumption by KR469 million (£51.7m), although it forecast that there would be a jump in smuggling by KR82m (£9m).

In a letter to Norway’s Ministry of Health and Care Services, the Ministry of Finance wrote, “Given the assumptions built into the model, it seems that the tax increase on alcohol would reduce Norwegian consumption of alcoholic beverages.”

According to a Norwegian online news resource The Local, Norway, with KR415 (£45.80) on each litre of pure alcohol, has the second highest alcohol taxes in the world after Iceland, which levies KR 461 (£50.90) on the same quantity.

The publication also pointed out that the equivalent levy in the UK would see alcohol taxed at KR230 (£25.40) for each litre of pure alcohol, half that of Iceland.

However, Kjetil Lund, a state secretary in the finance ministry, said described suggestions the government will raise the tax on alcohol as speculation.

“The government has not taken a position on the tax arrangements for 2014 yet,” he said.

He also commented, as reported by The Nose, “There is often speculation in advance of higher alcohol taxes and we do not comment on such speculation. History shows, however, that most years we have not increased alcohol taxes.”

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