Border trade and tax-free import of alcohol to Norway

Abstract

Due to the high prices of alcoholic beverages in their home country, Norwegians usually bring alcohol with them when they return from trips abroad. This can be either tax-free alcohol bought at airports or on ferries, or alcohol bought in ordinary shops in foreign countries. The Norwegians quotas for duty-free import are 1 litre of spirits, 1 litre of wine (2 litres if no spirits) and 2 litres of beer. For the Swedes and Finns the quotas have gradually been increased, since they became members of the EU in 1995, and from 1 January 2004 they can import nearly unlimited amounts of alcohol for personal use. As a result the prices have decreased and made it increasingly profitable for Norwegians to buy alcohol in these countries, especially in Sweden, which is nearest to Norway. In this article the development of the total private alcohol import by Norwegian travellers, and especially the border trade from Sweden, is estimated from a series of survey data spanning the years from 1962 to 2002. The total private import of alcohol (spirits, wine and beer) has increased by a factor of 13 during the last 40 years. In 2002 it was estimated at 90 centilitres of pure alcohol per inhabitant 15 years and older. This corresponds to nearly 16% of the officially recorded domestic sale of alcohol. During the whole period the predominant part of private import, in terms of pure alcohol, has been spirits, but the import of wine has increased even more, relatively speaking, and corresponded to about two thirds of the private import of spirits in 2002. The border trade in alcohol from Sweden has increased strongly since 1994, from about 6 centilitres per inhabitant 15 years and older to about 32 centilitres in 2002. In 1994 it represented about 11% of the total private import by travellers, and in 2002 it represented more than a third. Compared to recorded total domestic alcohol sales it represented about 5.5%. The increase was relatively moderate from 1994 to 1999, but from 1999 to 2002 the total border trade from Sweden, in terms of pure alcohol, increased by about 275%. This development has been caused by several concurrent factors. Firstly, the prices in Sweden have been reduced due to the increased availability of cheaper alcohol from Denmark. Secondly, the exchange rate between the Swedish and Norwegian currencies has been profitable for Norwegians, especially after year 2000. Thirdly, the opening hours of the Swedish alcohol monopoly shops were expanded to include Saturdays starting 1 July 2001, after having been closed on Saturdays for nearly 20 years. And fourthly, a strong focus in Norwegian media on the price levels in Sweden has probably also contributed to the strong increase in the border trade in both alcohol and other goods.