The newly installed Estonian government's plans for a more than twofold increase in the excise duty on low-alcohol beverages will hit whole sectors of the economy hard and the state will stand to lose up to 150 million euros annually due to a fall in excise and VAT revenue, the Estonian Brewers Association maintains.
"The hike in the excise duty on low-alcohol beverages ignores business owners' justified expectation of a stable business environment," the industry body said in a statement. "We're drawing attention to the fact that the state has already put in place a record excise duty hike through 2020 in accordance with which business owners have made their plans. Such a step by the government also spells an explosive increase in cross-border trade in the southern direction which affects the Estonian beer market and hits entire business sectors hard."
According to the association, the 2.2-fold rise in excise duty will raise the price of a bottle of beer to 1.5 euros, making one bottle of beer one whole euro and a case of beer 11 euros more expensive than in Latvia. Sales volumes in Estonia will fall by 60 percent as half of the domestic turnover will shift to Latvia and the whole port trade will be wiped out, the association argued.
"This significant revenue loss will threaten tens and hundreds of stores, particularly small shops and related jobs," the association said. "Furthermore, the number of Finnish tourists will decrease substantially. A considerable setback will hit the Estonian tourism sector through which hundreds of traders, tourist and service enterprises and their employees will lose."
The association thus called on the ministries and parliamentary committees responsible to assess the planned hikes' actual and comprehensive impact on the Estonian economy and its competitiveness, the local business environment as well as public health goals.
The new ruling coalition plans to raise the beer excise duty by 65 percent from July 2017, and by 166 percent from the present, to 22.09 cents per percentage by volume per liter of beer by 2020.
Editor: Editor: Aili Vahtla