Tony Öhberg contributed to this report.
The open sea from Helsinki to Tallinn is a pleasure many Finns have experienced at least once in their lives. The ferry trip, a warm summer day in the Estonian capital surrounded by shops and local culture, and the purchasing of duty-free goods on board the ferry are staples of the Finnish tourist experience.
The newly proposed tax increases on alcoholic beverages in Estonia means fewer Finns might be taking the trip across the Gulf of Finland to enjoy nights out in Tallinn. While alcohol prices remained for years in Estonia at less than half of those in Finland, tourists from Finland regularly packed into ferries and traveled across the 80 kilometers stretch of water, thirsty and ready to bring home a piece of their travels in the form of cases of beer and other purchases.
While in 2014, Finns bought third of Estonia’s booze, in the next few years, the price is set to rise around 50 percent in Estonia, making trips to the Baltic state less enticing for many who have made the trip a tradition. With Finns in mind, however, the Estonian government decided in November to cut the planned alcohol excise duty hike on beers, ciders and strong liquor in half for 2018.
While vodka and beer were to see increases in retail prices of about six percent due to the tax hike, the government decided to reduce the increase to within three percent. ”We want to reduce the amount of tax money flooding to our southern border and on the other hand, we don’t want that the number of traveling Finns on our northern border to diminish,” said the Estonian Minister of Finance Toomas Tõniste to Estonian newspaper Äripäev.
According to the Estonian Tourist Board, their country is the most popular destination for Finns. The “booze cruise” has been a staple of Finnish culture for years, offering quick getaways for locals wishing a weekend away or a few days of affordable relaxation.
A new victor, Latvia, the one southern neighbor finance minister Tõniste was referring to, may emerge in this battle of taxes, profits and regulations. According to a survey conducted by Research and Analysis Centre TAK, 37 percent of beer, 38 percent of cider and 39 percent of long drinks brought back to Finland via ferries from Estonia in July and August 2017 was purchased in Latvia or another foreign country.
Latvia has alcohol dedicated shops located on the Estonian border already reaping the benefits of their own cheaply priced alcohol. If planned tax hikes go forth, even to lesser percentages than previously suggested, Estonian alcohol retailers are set to lose out on customers to their opportunistic neighbors.
There’s, however, still hope for Estonia as well. The Finnish government has decided to increase the tax on alcohol by 100 million euros for 2018. While the price, according to the taxpayers’ associations calculations, increases only four cents per beer can on the watered-down brew, the most heavily taxed beer of all EU countries, the price for the Finnish standard of strong liquor, Koskenkorva, will increase as much as 55 cents per bottle.
When one can still get quality beer for under 1.50 euros just a short ferry trip away, even the trip to the corner store for cheap Karjala will continue to feel like a drag.
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