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The Swedes are planning their first tax increases on alcohol and tobacco in several years. But it will have little effect on cross-border trade, NHO believes.
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The Swedish government announces that it will increase taxes on alcohol and tobacco from 2023.
The last time the Swedes increased their taxes on tobacco was in January 2015. On the other hand, taxes on alcohol have not been raised since 2017.
Since then, the tariffs have lost some of their effect, according to the Swedish Finance Ministry. They note that alcohol prices have risen and that several of the neighboring countries have raised their taxes, some of them on several occasions.
The ministry also notes that Sweden has set some of the lowest cigarette prices in the EU compared to the purchasing power of its citizens, referring to a report from the EU Commission.
Will spend the money on defense
The Swedish Finance Ministry estimates that the increased rates will provide 410 and 550 and SEK million in additional revenue to the state when introduced.
At the same time, it is emphasized that these are preliminary estimates.
The government will use the money to increase funding for defense and warns that it will provide more details at a later time.
The tax increase will be included in the government’s budget proposal for 2021.
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– Still significant differences
Petter Haas Brubakk, CEO of NHO Mat og Drank, singles out tobacco as one of the engines of Norwegian cross-border trade. But the move by the Swedish authorities will have little effect on reducing trade, he believes.
– This means that the tax gap is somewhat reduced. But with all other conditions being equal, and with a state budget being presented as usual from now on, Norwegian taxes will increase during this period, Brubakk tells E24.
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In addition to tobacco, Bruakk highlights confectionery as one of the drivers of cross-border trade. It also points out meat products, which are not taxed in Norway.
– Not all groceries are necessarily cheaper in Sweden. What drives cross-border trade are Norwegian taxable goods, especially tobacco, snus and soft drinks, says Brubakk, continuing:
– It is safe to say that tax differences will remain significant after this. Sweden does not introduce taxes on sugar and also has a lower VAT on food, he says.
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– Could the tax change in Sweden have something to do with the Norwegian tax discussion?
– I’m not sure. In general, I would say that what is happening in other countries should interest us more. We put rates in a vacuum, regardless of others, says Brubakk, continuing:
– It is especially important to consider Sweden because that is where we have the most cross-border trade. The main problem with the debate is that we have increased taxes without looking at neighboring countries as competitors for consumers.
