þriðjudagur, ágúst 16, 2005

booze on the ice

Iceland has some pretty schizophrenic policies on alcohol.

On the one hand, the government carefully controls the distribution of alcohol. It's available only from government stores (think New Hampshire), and taxed at an astonishing level (don't think New Hampshire). The bottle of Beefeater gin that I bought in the Logan Airport duty free for $14 (or 920 Icelandic krónur) - and then promptly forgot in the overhead bin in my post-redeye haze - would cost me 3,200 ISK, or $48.50, to replace in the state booze store here.

But on the other hand, the government-run Vín Búð stores, the only place to legally buy wine, liquor, and full-strength beer, are hardly a paragon of restraint. These elegant shops elevate the sale of wine and beer to an art form, displaying the shiny new bottles in brightly-lit Scandinavian-look spaces. This ain't Fresh Pond Liquors. The stores also do their best to promote the consumption of booze in its various flavors. This summer, there is a free glossy brochure available to help customers choose the best summer wines to go along with their grilled lamb, beef, and fish. The free catalogue of wines and spirits, published several times a year, is extensive and colorful.

Which begs the question, what are the high taxes for? Clearly not to encourage restraint in consumption, if the government's own peddlers are doing their best to sell the stuff. While the original intent of the high taxes may have been to discourage consumption, it seems the government is earning so much revenue on these taxes that its own "alchohol habit" is hard to kick.

According to a 2004 Iceland Review article, the Icelandic government takes in ISK 7.1 billion in alcohol taxes each year. That's $112 million. That's $380 for every man, woman, and child in Iceland, each year. It's also 40% more than the government takes in on gasoline taxes. This money goes straight into the state coffers, not earmarked for any special purpose. Funding of the treatment center for alcoholism costs the government a mere 400 million ISK per year, or under 6% of the alcohol tax receipts.

The high price of alcohol here is just a regressive tax, one that hits those least able to pay it the hardest. Sure, people don't really need to buy booze, but sharing drinks together is a large part of the social scene here. Alcohol is as prevalent in Iceland as the fresh air, and is an undeniable part of Icelandic society. The obscene prices do little to nothing to discourage consumption, as a walk down Laugavegur at 3 am on a Saturday will quickly show.

This regressive tax becomes all the more regressive considering that the alcohol tax is not based on a percentage of the price of the product (the way sales taxes and VAT work) but on the volume of alcohol in the product. So a $10 bottle of wine incurs a $10 tax, doubling in price, while a $60 bottle of wine is only $70. Someone looking for high-end wine or Scotch whiskey may even find some passable deals here. Meanwhile someone looking for a bottle of cheap table wine is likely to be priced out of the market, and beer is $4 a can, a six-pack retailing for a whole $24. It's no wonder Icelanders treat the stuff like gold.

2 Comments:

Anonymous JDK said...

So, Sept 1, 5 people, one flight from Boston - that's a whole lot of booze in those carry-ons I'm thinking....

:)

17.8.05  
Blogger JB said...

Don't laugh, it's codified in Icelandic Law. All visitors to the country must bestow on their hosts the maximum permissible allotment of booze.

Per person, those numbers are:

1 litre spirits and 1 litre wine or
1 litre spirits and 6 litres beer or
1 litre wine and 6 litres beer or
2.25 litres wine

:-)

17.8.05  

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