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SDE MP: Coalition unlikely to hike vodka excise duty any time soon

Jevgeni Ossinovski in the Vikerraadio studio.
Jevgeni Ossinovski in the Vikerraadio studio. Source: Kirke Ert/ERR

Social Democratic Party MP Jevgeni Ossinovski says he does not believe the current coalition his party is in office in with Reform and Eesti 200 will abruptly hike excise duties on, and consequently prices of, vodka and other strong liquor.

When he was Minister for Health and Labor, Jevgeni Ossinovski tightened up Estonia's alcohol policy, mid-way through the last decade.

The MP said that while alcohol excise will generally rise next year, it will not be at a rate above that of wage rises.

"From next year, alcohol excise duty will slowly increase, but in reality it will still be below the growth of average wages. The whole of society has already had a traumatic experience with cross-border trade in alcohol, an as a consequence, will move forward very cautiously and this is normal and natural, but it [also] has its effects on public health," Ossinovski commented, appearing on Vikerradio's "Vikerhommik" show.

This "traumatic experience" refers to the period of time, following the excise hikes a few years ago, when Estonia lost a lot of trade south of the border to Latvia, which had not hiked its excise duties.

At its peak in 2018 this led not only to Estonians going to Latvian border towns such as Valka to stock up on strong drinks, but even Finns, who more stereotypically might have in the past only needed to have gone as far south as Tallinn.

In 2019, excise duties on alcohol were cut; the current economic situation has brought the issue of excise duty hikes as a way of raising funds for the state coffers back on to the agenda on both sides of the Estonia-Latvia border.

The SDE MP noted that: "In general, world experience says that the more you can buy, the more you buy. And when the alcohol excise duty was lowered in 2019, alcohol consumption automatically increased. And since then, excise taxes have been at the same level for several years, and as a result, the relative availability of alcohol has increased. Hopefully it will not be a surprise to anyone that it has turned out this way," he noted.

Ossinovski also said that since the requirement for alcohol sales licenses was abolished some years ago, enforcing existing restrictions and sanctions on alcohol sellers is in any case not viable.

Ossinovski now says he recommends the government cooperate with the southern neighbor, in the light of the plans to raise alcohol excise duties there to; he also recommends the Ministry of Social Affairs prepare potential new restrictive measures.

However, he hedged this about by stating that he doesn't see a major hike in excise coming in Estonia.

"No, I don't think we will see any very ambitious policy changes in this context. The political trauma of five-and-a-bit years ago is still fresh in everyone's minds, so that's why things would likely have to get a lot worse before any further steps were taken,"

Ossinovski was referring to the entire period a Reform Party-led is likely to remain in office, ie. through to the next general election in 2027.

Ossinovski also referred to an alcohol policy policy green book from 2013 which presented thought-through and evidence-based measures aimed at reducing the harm caused by alcohol consumption; in 2015, when he became health minister, the corresponding changes were enshrined in the law.

Ossinovski said that this same green book is still valid, meaning sufficient preliminary work is there for policy to be implemented "relatively quickly, if the political will is there," along with the most recent scientific research on worldwide measures which have been seen to have work.

"For example, the regulation of the minimum unit price of alcohol has withstood [a hearing at] the European Court.

On the other hand, current EU regulations mean up to several hundred liters of beer, and dozens of liters of spirits, can be purchased from another member state, under personal use allowance.

This makes it difficult to monitor the cross-border trade in alcohol in any case, he said.

"What we essentially could, and should, do is to come to an agreement with our southern neighbors, in fact involving all three Baltic states, where in fact the situation with regard to alcohol harm is comparable; about as bad," he said.

Ossinovski pointed out that Latvia's finance ministry has proposed a faster rise in excise duties – state budgetary considerations are a factor too.

"This could actually be the opportunity where our Ministry of Finance could try to strike an agreement with them whereby we raise [duties], for example at the same pace. It could be a reasonable agreement, but I don't know if it will work out," he noted.

While uniform minimum rates on alcohol excise duties do exist, at EU level, they are so low, Ossinovski said – for instance zero for beers and wines and fairly negligible for spirits – the measure is largely toothless when it comes to states' influencing the situation on alcohol consumption.

Also, each country tends to have its own alcohol lobbyists, which fight their corner quite aggressively, he said.

According to Ossinovski, measures to limit alcohol consumption are common knowledge, but they must be implemented in a concert and over a longer period of time

According to the World Health Organization's (WHO) global alcohol strategy, measures of this kind include restrictions on alcohol advertising, tightening of sales conditions, sufficiently high prices, counseling and treatment. "In the bigger picture, we know what should be done in society – there is no need to re-invent the wheel," Ossinovski said.


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Editor: Andrew Whyte, Mait Ots

Source: 'Vikerhommik,' interviewers Kirke Ert, Taavi Libe.

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