The ministry has sent the bill, which is in line with the relevant section of the Reform-SDE-Eesti 200 coalition agreement signed in July, for its coordination round.

The government is expediting the bill's approval round, giving just three working days (to Wednesday, September ), for that to happen, while another bill which will remove the so-called "tax hump" is being presented to stakeholders at the same time and with the same limited time to process it.

The excise duty on gasoline has remained unchanged in Estonia since 2018. Alcohol and tobacco excise duties have already been hiked for 2025 and 2026 – the bill raises them once again, before the initial hike has come into effect.

However thanks to the challenging situation facing the state budget, whose 2025 bill is being drawn up as well, the excise duty on unleaded gasoline and aviation fuel will rise by 5 percent per year over the next four years.

The hike for 2025 will take effect mid-year, on July 1, while in subsequent years, it will begin earlier in the year, on May 1.

The ministry noted that the combined impact of the excise duty increase and the VAT hike planned for 2025 will amount to a cost rise of 6.3 cents per liter, with the annual increase thereafter staying below four cents per liter.

The base price of gasoline without taxes would remain roughly the same, but the final price is expected to rise from the current €1.66 per liter, to €1.72 by 2025.

There are already enshrined into law excise duty hikes on alcohol and tobacco products coming into effect in January 2025 and in January 2026,

The bill means excise duty on these products will rise by an additional 5 percent on top of that, in both July 2025 and January 2026, leading to a total increase of 10 percent over the two-year period.

As for 2027 and 2028, the excise duty on alcohol and tobacco will rise by 5 percent per year, as things stand.

The ministry said that following the alcohol excise duty cut put in place by the Center-EKRE-Isamaa administration in 2019, duties only began to rise again from early on this year.

From that baseline, the excise duty on beer will rise to 37 cents per liter by July 1, 2025, while the excise duty on strong alcohol will reach €4.36 per half-liter.

For instance, the price of a bottle of 5 percent beer currently priced at €1.50 would rise to €1.57 by summer 2025, inclusive of the VAT rise.

Meanwhile, the price of a 0.5-liter bottle of vodka, now at €9, would rise to €9.66 by next summer.

The ministry conceded that the impact of excise duty increases on consumption is difficult to forecast, but overall, the effect on the Estonian economy and businesses would be minimal, the ministry added.

Cigarette prices have risen year-on-year due to regular excise duty hikes.

The two excise duty hikes planned for next year will lead to an average 11.4-percent rise in the price of a pack of 20 cigarettes, and so a slight decline in consumption is forecast. However, despite this, state revenues from tobacco sales are expected to grow, the ministry said.

These changes reflect Estonia's taxation policy, which aims to tax consumption, pollution, and health-damaging products more heavily, the Ministry of Finance stated.

Finance Minister Jürgen Ligi (Reform) said: "Products which have harmful side effects have become more accessible over time, making excise duties a less painful way to reduce the budget deficit compared to other taxes."

This means rising excise duties will remain a trend to come.

"The expectation is that excise duties will further limit consumption," the minister went on.

Limited time for review of bill

The various stakeholders: Government agencies and business organizations mainly, have only until next Wednesday to review and provide feedback on both the excise duty increases and the postponement of the so-called tax hump elimination.

The excise duty bill has been sent for review to organizations such as the Chamber of Commerce and Industry (Kaubandus-tööstuskoda) the retailers' association (Kaupmeeste liit), the taxpayers' association (Maksumaksjate liit), the Agricultural Chamber of Commerce (Põllumajandus-kaubanduskoda), the brewers association (Õlletootjate liid), the alcohol producers and importers union (Alkoholitootjate ja maaletoojate liit), the transport fuel association (Transpordikütuse ühing), the Estonian Aviation Cluster (Eesti lennundusklaster), Philip Morris Eesti, and British American Tobacco Eesti.

Toomas Mattson, an advisor at the National Audit Office (Riigikontroll), expressed concerns about the short time frame for feedback.

He pointed out the difficulty organizations face in gathering meaningful input from their members, summarizing it, and providing feedback within just three working days.

"Then, based on the feedback, consideration is needed to be given to whether changes to the bill are needed, and if so, what kind.

"It seems to me that in such circumstances, it would be more respectful to not send the bills to recipients for essentially 48 hours to avoid such 'involvement.' Everyone would feel better about it. At least the explanatory memorandum honestly states that things are moving rapidly because the state budget urgently needs funds, while it doesn't go on about the environment, reducing car usage, public health, and so on," Mattson continued.

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