EXCISE TAXATION, MARKET INNOVATION, AND REGULATORY BLINDNESS: EVIDENCE FROM THE BALTIC SEA REGION
EXCISE TAXATION, MARKET INNOVATION, AND REGULATORY BLINDNESS: EVIDENCE FROM THE BALTIC SEA REGION

Summary/Abstract: Aim: This study examines divergent trends in alcohol control policies across Baltic and Nordic countries, focusing on the efficacy of excise taxes as a public health instrument. It aims to identify why systematic increases in excise duties often fail to achieve the intended reductions in consumption, indicating that decision-makers ignore changing consumer behavior and technological progress in production processes - a phenomenon called legal blindness. Methods: The study employs a comparative policy analysis across eight Baltic Sea Member States. Data selection criteria focused on national excise legislation and the Excise Movement and Control System (EMCS) reporting between 2020 and 2025. Statistical data was accessed via the European Commission's Taxation and Customs Union databases and cross-referenced with national reporting from the respective Ministries of Finance. The review protocol involved a systematic search of peer-reviewed literature using the keywords: alcohol excise tax, EMCS data fragmentation, and alcohol policy. The study provides comparative regulatory and fiscal evidence from eight Baltic Sea Member States, drawing on EMCS movement data and national excise legislation for the period 2020-2025. Results: Findings reveal a significant discrepancy between policy goals and outcomes. Preliminary analysis suggests that minor technical discrepancies in the interpretation of EU excise categories, combined with technological shifts toward low-alcohol content products, may lead to systemic data fragmentation. Furthermore, evidence suggests that aggressive taxation often triggers a shift toward legally underclass products, which are frequently underrepresented in official statistics, thereby distorting the view of policy effectiveness. Conclusions: The study concludes that traditional excise-heavy policies are becoming less effective due to generational shifts in consumption and rapid product innovation. To overcome current so-called legal blindness, policymakers must move beyond strict compliance with EU instruments and adopt evidence-based frameworks that account for technological market evolution. Improved data integration is essential to mitigate the so-called grey market risks and ensure public health objectives are met.

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