The Confederation of Norwegian Commercial and Service Enterprises (HSH) is urging the government to reconsider reducing alcohol and tobacco taxes as Norwegian companies continue to lose trade to cross-border shopping in Sweden and Denmark.

According to the HSH's chief economist, Lars Haarveit, Norway loses NOK4.0 billion ($530m/€537m) in tax revenue annually as a result of cross-border shopping in other Scandinavian countries.

The HSH's contentions were supported by a survey conducted by the Norwegian statistics agency, Sentio-Norsk Statistik, which found that a total of one million Norwegians travelled to Sweden to buy cheaper alcohol and tobacco products in the summer of 2002. Norwegians are thought to spend NOK10 billion in Sweden and cross-border shopping has been on the increase as Sweden has steadily reduced its own alcohol and cigarette taxes since it joined the EU.

As a result of its higher taxes, Norway has the highest alcohol, tobacco, meat and dairy products prices of any Scandinavian country. The HSH said that if the government does not cut alcohol and tobacco taxes, Norwegian retailers and producers will suffer financial problems.

However, Norway's agriculture minister, Lars Sponheim, was reported in the Norwegian newspaper, Aftenposten, as saying that a reduction in alcohol and tobacco taxes was out of the question. "It is not the policy of this government to make any changes in taxes and duties on alcohol," Sponheim said.