ABSTRACT
Cross-border alcohol shopping threatens health outcomes and tax revenue, yet offers potential jobs and investment for the Baltic border regions. Exploiting the COVID-19-induced border closures in 2020 with an event study, and several large tax changes using differences-in-differences, this paper measures beer purchases in border regions of the Baltic States. Using monthly data from the Carlsberg group, beer sales in lower tax border regions dropped sharply during the COVID-19 closures, while sales increased modestly in higher tax border areas. Evidence from tax changes in Lithuania and Estonia also suggests dramatic effects on sales in lower tax Latvian border districts.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the author.
Notes
1. The Schengen Zone consists of 26 European countries that have abolished internal border checks and passport controls with a common visa policy.
2. Counties, municipalities and districts are the English translations used by the respective governments.
3. These figures come directly from the Carlsberg group.
4. In the United States, the analogue would be 40 oz. containers of malt liquor.
5. This was confirmed in an interview with Gediminas Kulikauskas from Lithuanian Customs (https://lrmuitine.lt/). Written informed consent was obtained from the interviewee regarding publication of material related to his interview and to be identified.
6. Assuming a 5% alcohol content.