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Finance minister: No massive loss of tax revenue coming

Toomas Tõniste.
Toomas Tõniste. Source: (Reuters/Scanpix)

Responding to numbers published by the Estonian Food Industry Association on Tuesday, according to which the state stands to lose €170 million in tax revenue in 2018 alone due to higher excise duties, Minister of Finance Toomas Tõniste (IRL) pointed out that this was PR more than anything else.

Tõniste said on ERR’s Vikerraadio on Tuesday that though the higher excise duties on alcohol would doubtlessly have an effect on sales to cruise tourists in Tallinn, and Estonians would buy more across the southern border in Latvia, the state wouldn’t lose any money over it.

This year the budgeted alcohol excise revenue is €276 million, €25 million more than last year. Asked if this would eventually come together, also pointing at the massive losses predicted by the Food Industry Association, Tõniste said that this was the work of public relations people more than anything else.

“I think the aim of their PR people was to create the impression that the state will lose. Until now, the Ministry of Finance’s predictions have been the most exact, and they in fact expect revenue to grow. In that sense we certainly can’t say today that we’re losing anything, the state gets more excise revenue than before the excise hike,” Tõniste said.

Cross-border shoppers of course affected the numbers, Tõniste conceded, but seeing as the Latvians were planning to raise their excise duties as well, the Estonian state’s returns could be even higher than budgeted.

Tõniste also argued that Latvia stood to benefit more from higher alcohol excise revenue than it did from the local business of Estonians crossing the border to buy drinks.

Commenting on the fact that even after such a hike in Latvia, excise rates there would still be three times lower than in Estonia, Tõniste said that some cross-border shoppers would always remain.

“Just like we have cross-border shoppers from Finland. We’re forecasting in our prognosis that this business from Finland will shrink a little, and the cross-border shopping in Latvia increase,” Tõniste said, adding that there would still be an additional €60 to 70 million in excise revenue in 2018, so there could be no talking about losses.

The Ministry of Finance’s press office said last week that in the ministry’s assessment, Estonia would lose €22 million in tax revenue this year due to people shopping in Latvia.

Editor: Dario Cavegn

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