Iceland review - 2004, Qupperneq 32

30 ICELAND REVIEW
The Icelandic Travel Industry Association
(ITIA) serves as the umbrella organization
for the various sectors making up the tourist
industry, of which hotel and restaurant
owners account for half of ITIA members.
Because ITIA’s goal is to make the tourism
industry as profitable as possible in the long
run, the association is concerned that the
high tax on wine – a product with a high
potential return for hotels and restaurants –
is deterring travel to Iceland. A wine pur-
chaser in Iceland pays ISK 515 (about USD 7)
in taxes per litre of wine – the highest
amount in all of Europe. Add the VAT to
that and you’re paying a lot for that Merlot.
The Irish come in second again, paying only
ISK 250 (USD 3.41) for the same amount.
“Everything counts when deciding where to
spend a vacation or have conferences,” says
Erna Hauksdóttir, Director of ITIA. “Good
restaurants in Iceland sell decent wines at
exorbitant prices or not at all.” Compared to
Europe, almost everything has a higher tax
in Iceland. However, ITIA argues that the tax
on wine is excessive. “The high prices for
wine are due to taxes. This is bad for
tourism, but it is a source of income for the
state,” says Hauksdóttir. Indeed, the govern-
ment of Iceland generates greater revenue
on alcohol taxes than it does on petrol taxes
– an ISK 2 billion (about USD 27.3 million)
difference. The total revenue generated
from the alcohol industry is ISK 7.1 billion
(USD 97.9 million), which is deposited into
the state budget.
For a good cause
“Nordic cultures tend to drink more hard
liquor than they do in the southern parts of
the world where they tend to drink less hard
liquor, but where they drink more often,”
offers Helgi Gunnlaugsson. So ban beer,
allow hard liquor, control the hell out of it
and voilà, treatment.
SÁÁ is Iceland’s Centre for the Treatment
and Prevention of Alcohol-Related
Problems. It was founded in 1977 after a few
Icelanders returned from the US having
undergone drug and alcohol rehab. The
centre approaches alcoholism as a disease
and is a comprehensive treatment facility
with a detoxification unit and halfway hous-
es. Thórarinn Tyrfingsson, MD, the coordina-
tor at SÁÁ, says that 10.1% of Icelandic men
over the age of 15 have been treated at SÁÁ
and 3.9% of Icelandic women.
According to Thórarinn Tyrfingsson, the
centre’s annual budget is around ISK 500
million (almost USD 7 million) of which the
government finances 80%, or about ISK 400
million (USD 5.6 million) to operate the facil-
ity. Thórarinn suggests this is an expensive
operation, and it does to some extent justi-
fy a sales tax on alcohol: “We are not trying
to prevent the sale of alcohol, necessarily,
we just want to know who is going to pay
for the damages, if not the customer?”
“The treatment industry is relatively power-
ful in Iceland. It is influenced by the US
model and has become a convincing interest
group. It has proven powerful and has
placed itself in the centre of dialogue and
the budget,” says Helgi Gunnlaugsson. This
seems rational, but the figures still don’t
add up. The cost of treatment, even with
Iceland’s unusually high rate of alcoholism,
still only makes up for 14% of the revenue
made from alcohol taxes.
According to staff, ATVR sells close to nine-
teen thousand litres per year of Brennivín
(40% alcohol), which is Iceland’s national
liquor. The most popular item sold is Viking
Beer (5.6% alcohol) at almost 1,775,000
litres per year, and the most popular hard
liquor sold is a vodka that is 37.5% alcohol
and costs 3,880kr (about USD53) per liter.
Consumers in Iceland buy close to 45,000
“Since the government’s recent policy changes
– more stores, longer hours of operation, the
sale of beer – alcohol is becoming less of a
demon substance.”
“Nordic cultures tend to drink more hard liquor
than they do in the southern parts of the world
where they tend to drink less hard liquor, but
where they drink more often,”
Alcohol 14.6.2004 21:27 Page 30