The Swedish government will make it more expensive to consume alcohol to pay for tax cuts elsewhere
Friday, 30 August 2013
The Swedish government will raise the price for alcohol through
taxation of about 13 per cent in the autumn budget. Since tax cuts are
already promised, it is looking for where to plug back that donut hole.
According to media reports, budget negotiations are already in the
final stages where the tax increase is equivalent to a price increase
of about Skr3 for a bottle of wine. According to the treasury
department estimates, the tax increase will give Skr1.1 billion in
additional revenue to the budget.
But the estimates pose other questions such as the effects of fall in
sales and the risk of increased smuggling. This is because
consumer goods analysts feel that the government underestimates the
price sensitivity of alcohol. They believe that the introduction will
increase three to five times more the prices than the Finance Ministry
The reform has been around since the alliance's election manifesto in 2010 and Anders Borg recalled the plans in spring 2011.
The minister has promised tax cuts and must look for ways to pay for it
or to get revenue. However, the problem here is that if alcohol is
cheaper in Denmark, then people will turn there for their purchase and
also it would expand the league to smugglers.
By Scancomark.com Team
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