Finland's brewing and soft drinks industry federation has warned the Government that plans for a significant hike in taxes on beer, spirits and wine will impact negatively on profits and expand demand for imported alcohol products.

The warning from Panimo ja Virkoitus Juomateollisliitto (PVJTL) is directed at a Ministry of Finance (MoF) plan to raise taxes on beers and spirits by 10%, while taxes on spirits will increase by a planned 15% during the first quarter of 2008. The tax hikes are included in the Government's draft budget for 2008.

Finland's previous alcohol tax initiative, which took place in 2004, resulted in the then Government reducing taxes on alcohol by between 10% and 12% on beer and spirits.

"Ideally we would like the Government to revoke all plans for further tax increases on alcohol. If this cannot be done then we would ask that the tax increases are introduced in stages over the next four years and not all at once," said Timo Jaatinen, the PVJTL's managing director.

The budget proposal envisages a 10% tax rise on wine and beer and a 15% tax increase on spirits.

"Industry would have to pass on these increases, and these increases would lead to price increases of up to 15% and make Finland one of the dearest countries in the European Union for alcohol," said Jaatinen.