The Swedish government yesterday proposed to cut liquor tax by 40% next year, in an effort to discourage cross border shopping.
 
Sales at the state-run liquor monopoly, Systembolaget, have been falling since Estonia joined the EU and neighbouring Denmark and Finland cut their alcohol taxes, which has attracted Swedish drinkers to buy abroad.
 
"Month by month, domestic sales are decreasing, and month by month, imports are increasing," said Kent Haerstedt, a spokesman for the tax reduction plan. "This is a development that is unacceptable to us."

Currently, Sweden has a 200 kronor ($1=SEK7.4620) tax on one litre of spirits. If the government proposal is approved by Parliament later this fall, the tax would fall to 120 kronor per litre of spirits.

The new tax system would cut retail prices by about 30%, in most cases, which it is hoped will reduce private alcohol imports by 15% next year.

"The proposal for lowering the alcohol tax is unfortunately necessary in the situation we're in, for the sake of public health," Sytembolaget's chief executive, Anitra Steen, said.

Taxes on wine and beer wouldn't be affected under the proposal.