Five countries in northern Europe, all with coastlines on the Baltic Sea, have been trying to pull their populations out of a culture of hard-drinking in the so-called vodka zone over the past few decades at different speeds, producing varied, and sometimes curious, results.
A recent example can be found in the shape of a mini-tax-war between Estonia and Latvia, as thousands of Estonians go south across the seamless Latvian border to stock up on hard liquor and beer, which is cheaper in Latvia. The phenomenon has created a thriving boozy business in several Latvian border towns.
But now a 25% cut in Estonia’s alcohol excise tax threatens that. The measure could curb substantial tax revenues from the pockets of thirsty Estonian cross-border buyers going to Latvia’s treasury.
Latvia is planning to retaliate with an excise tax cut of its own, with health officials in both countries concerned that a battle over several tens of millions of euros in tax revenues will end up costing far more in alcohol-related accidents, illness and death.
Nordic countries Denmark, Sweden, and Finland have had restrictive alcohol policies for many decades, with state retail monopolies in Sweden and Finland, and high taxes on alcoholic beverages in all three.
Sweden’s Systembolaget network of shops is said to be one of the few Swedish enterprises that aims to reduce its sales year-to-year.
Like its neighbor Finland to the east and Norway to the west, Sweden was a nation of hard-drinking farmers until the 20th century, and until 1955 had a monthly rationing system for alcohol that required a stamp in a special ration book for every purchase.
It is no surprise that cheaper liquor sales flourished on ferry lines across the Baltic even before Estonia, Latvia and Lithuania regained their independence. In the early 1990s, shocked Scandinavian tourists in Riga found street corner stands selling bottles of pure grain alcohol along with crates of bananas, which had been a rarity under the Soviet rule.
Now all three Baltic countries tax alcohol sales and restrict sales at stores to certain daytime and evening hours.
Heavy drinking was also a major problem in Latvia, where the village tavern alongside the strict Lutheran churches was an instrument for keeping the Latvian peasants drunk or in fear of God under their local landowning German lords and the Czar.
The arrival of representatives of the Moravian Church and the founding of Congregations of the Brethren in Latvia in the late 18th and into the 19th century encouraged both temperance and a kind of egalitarianism (no formal ministers) that proved dangerous to the social order.
However, many Latvians remained heavy drinkers throughout the 20th century, especially under Soviet rule, where workplace drinking, while condemned in repeated official campaigns, was common practice.
The latest developments in the “alcohol war” came just ahead of the Midsummer holiday, a time for beer-fueled festivities, and provided some entertainment for the public on both sides of the border.
Latvian Prime Minister Krisjanis Karins said that Estonia had violated an earlier agreement on not making excise tax changes without consultation, something which Estonian Minister of the Interior Mart Helme said denied.
Meanwhile, despite Estonia’s 25 % excise cut coming into effect in July, cross border sales continued vigorously ahead of Midsummer, especially in the “divided town” of Latvian Valka and Estonian Valga.
On a recent weekend, a steady stream of Estonian buyers showed up at the many liquor stores and supermarkets on the Latvian side of the border, looking to save a good bit of money on all kinds of alcohol. While some came on foot, others drove considerable distances by car to stock up on vodka, beer and other beverages.
According to the Latvian Chamber of Commerce, 52% of Estonians who visited Latvia last year made an alcohol purchase while there. A recent sample purchase showed that a one-liter bottle of rum currently costs 1/3 less in Latvian Valka than it does in the Estonian capital city of Tallinn.
The decision to lower excise tax in Estonia fulfills a campaign promise made by the Conservative People's Party of Estonia (EKRE) earlier in the year.
EKRE did unexpectedly well in the general elections held in Estonia in March and joined the government coalition.
Estonian political commentator Toomas Sildam says relations between the Baltic neighbors soured due to recent accusatory comments by both sides and to a breakdown in communications.
Karins has suggested that all three Baltic countries try to work toward similar levels of alcohol taxation.EFE