The price of alcoholic drinks and petrol and diesel are set to increase from 1st January as another tax hike takes hold. Weary Icelandic consumers can take some comfort in the fact that the price rises will be smaller than previous increases since the banking crisis.
The duty charged on alcohol will be going up for the fourth time since the crisis hit in autumn 2008 — an overall increase of some 50 percent.
The first rise came when alcohol tax was put up by 12.5 percent, then by 15 percent, and then by a further 10 percent. This time, there will be an additional four percent tax charged on beer and wine and one percent more on spirits, RUV reports.
The tax increases have had a marked impact on the retail price of alcohol, with many products costing 50 percent more, or even higher. For example, a half litre can of beer in the state alcohol store has increased by roughly 46 percent, or ISK 100 (USD 0.86) since the banking crisis. A cheap bottle of wine is now 47 percent more expensive, or ISK 450 (USD 3.85).
Meanwhile, the cost of a litre of petrol or diesel is likely to go up by some ISK 10 (USD 0.09). The tax charged by the Icelandic state will go up by ISK 5 (USD 0.04) and the rest is expected to come from the oil companies.
The global oil price has shot up in recent years and made a five percent increase in the days leading up to Christmas, which has already led Icelandic oil companies to put their prices up.
In December 2008, the raw global price of a litre of petrol was ISK 27 (USD 0.23) but is now three-times more expensive at ISK 72. At the same time, the duty charged by the Icelandic state has gone up from ISK 59 to ISK 97. The profit taken by the oil companies has, on the other hand, gone down from around ISK 60 to ISK 45 – 50, where it is now. The cost of a litre of petrol was therefore ISK 146 (USD 1.25) two years ago and ISK 214 (1.83) today.