Latvia makes smaller alcohol excise hike than first planned

Alcohol store (picture is illustrative).
Alcohol store (picture is illustrative). Source: (Siim Lõvi/ERR)

Estonia's southern neighbor Latvia is to increase its alcohol excise duty from March 1, though significantly less than originally planned, according to ERR's online news in Estonian.

The Saeima opted to carry out a hike of 5 percent this year, and 5 percent in 2021, on Thursday evening. Policy has reportedly been influenced by decisions made by neighboring countries, including Estonia, with opposition coming from MPs though not the finance ministry itself, ERR reports.

The alcohol sector had been opposed steady rise in prices, but Thursday's decision by Parliament is a compromise.

The legal amendments passed their two readings in a single day on Thursday, meaning excise duty on a liter of spirits increases by 38 percent

According to the previous plan, the excise duty on spirits in Latvia was expected to increase by almost 30 percent.

Deputy Chairman of the Saeima's Budget and Finance Committee Iveta Behena-Bekena told the ERR Thursday that although the parliament approved the essential principles on tax policy in 2017, the situation has changed over time. 

"We also had to do something and decide on the current situation, she said.

Estonia slashed its excise duties on wine and beers by 25 percent last summer. Critics of the previous rates, which had been successively hiked over several years, said it harmed the domestic alcohol trade and led to consumers, even from as far afield as Finland, stocking up in Latvian border towns. The move was met with some retaliatory measures by Latvia, including a temporary cut in its rate for strong liquor which reportedly runs until February 29.

Both countries are in the Eurozone.

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Editor: Andrew Whyte

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