Terror of virtue: first it was alcohol, now it’s sugar
Andri Thor Gudmundsson, CEO of Ölgerdin, complained that the tax had been badly crafted. Mr Gudmundsson reportedly said that it was unfair that a so-called sugar tax was levied on unsweetened fruit juices and sparkling water while chocolate milk, cocoa puffs and chocolate cereal were exempt from it.
Although the sugar tax has been done away with, the government pressed ahead with yet another tax hike on alcohol. On January 2010 the tax on alcohol and tobacco was raised by 10 percent. That’s the third tax hike within a year. The alcohol and tobacco tax was upped by 12.5 percent in December 2008 and by 15 percent in the spring of 2009.
Surprisingly, sales of alcohol have hardly been affected by the tax increases despite the fact that they were passed on to the consumer.
According to reports, in the first nine months of 2009, the total volume sales of alcohol were almost the same as in the same period 2008.
Only the sale of red wine dropped by 1.7 percent, while the sale of white wine went up by 6.4 percent. Sales of beer were 1.5 percent higher. However, the sale of spirits and mixed beverages dropped significantly by 16.7 percent and 37.5 percent, respectively.
The latest tax increase will bring up the price of a standard can of beer by 18 percent, it was reported.
All full-strength-beers, wines and spirits are sold through the government monopoly called “vinbud” – a chain of 46 stores – locally called “rikid” which literally means The State.
