Speaking to "Terevisioon" Wednesday, Jesse stressed that the government's alcohol policy should be viewed more as a whole and should address both pricing and consumption habits.

She noted that relying solely on the point that cross-border trade would lead to revenue loss is insufficient justification for a decision of that kind.

The finance committee had argued that hiking alcohol excise rates would result in a surge in cross-border trade, which in turn would lead to revenue losses to the state.

However, Jesse dismissed this argument as "shallow," adding that it seemed to have been made without thorough analysis.

Jesse expressed her concerns that this reasoning seemed to have been hastily formulated and without taking realistic forecasts on the volume of cross-border trade in 2025 into consideration.

Jesse said: "These are not drastic; it certainly cannot be that the half of the Estonian public that does consume alcohol would travel to Latvia specifically to buy alcohol."

Jesse also pointed out that, despite a rise in alcohol consumption in Estonia, excise revenues remain at the levels they were in 2016.

"We consume more alcohol in Estonia now than in 2016, yet the excise revenue for the state budget remains the same," she noted.

A cut in excise rates made in 2019 may be the reason for this stagnation in revenue, Jesse added.

"This, however, overlooks the broader economic context which might explain revenue trends of these kinds, such as the unintended effects of excise tax reductions on the black market, or of cross-border shopping, which might have offset the projected rise in revenue," Jesse continued.

In her remarks, Jesse called for a more comprehensive alcohol policy, noting that excise duties play a major role in alcohol pricing, but they cannot be the only measure used to influence consumption.

"Alcohol policy needs to be viewed more comprehensively," Jesse went on.

"What we are currently seeing is that alcohol consumption has risen, but a more holistic approach to alcohol policy has not been developed, or pursued. This has once again gone in the direction of self-regulation," she argued.

Jesse stressed that addressing alcohol-related harm requires a multi-faceted approach which goes beyond simply taxation, such as promoting public health campaigns and improving addiction treatment programs.

The expert also pointed out that the current economic downturn has curbed alcohol consumption, and said that people with lower or moderate alcohol consumption tend to reduce their intake during economic downturns.

This, she noted, may explain why alcohol excise revenue has been lower than expected.

"As in all previous economic crises, people with lower or moderate alcohol consumption reduce their intake," she said.

That said, individuals who suffer from alcohol addiction cannot regulate their consumption on their own, meaning additional measures are needed to address this issue.

Finally, Jesse stressed that a Ministry of Social Affairs' green paper on alcohol policy provides a comprehensive set of proposals aimed at tackling alcohol-related problems.

However, she expressed frustration that these recommendations are not being taken seriously by politicians in the Riigikogu.

"These decisions are not based on a comprehensive approach but rather on isolated elements of the state budget," Jesse concluded, cautioning that this can serve to undermine the state's credibility too.

Maris Jesse was a prominent figure during the Covid pandemic, at a time when she was a deputy secretary general at the social affairs ministry.

The Riigikogu Finance Committee at the start of the week canceled a planned 5 percent alcohol excise duty increase for 2025, citing concerns over revenue loss due to increased cross-border trade and the black market.

Estonia's alcohol excise duty had previously caused significant cross-border trade with Latvia, which accounted for 13 percent of Latvia's alcohol excise revenue in 2017, costing Estonia millions in lost tax revenue until a 2019 reduction.

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