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Valka mayor: Real loss caused by Estonian excise hike much higher

An Alko1000 alcohol store on the Latvian side of the border.
An Alko1000 alcohol store on the Latvian side of the border. Source: (Mailiis Ollino)

The mayor of the Latvian border town of Valka, right across from Valga on the Estonian side, said on Latvian TV earlier this week that the real damage done by the Estonian government's recent excise hike will likely be a lot greater than Tallinn is ready to admit.

Daily Maaleht (link in Estonian) reported on Thursday that Mayor Vents Armands Krauklis said on RīgaTV 24 program "Preses klubs" that talking about the Estonian state's loss caused by higher excise duties, one can't ignore that most Estonians crossing over into Latvia to buy alcoholic drinks will also go shopping and stop to buy gas.

"You have to take the fact into account that every Estonian or Finn who drives here also pays value-added tax and fills up. Like this the loss comes in at least at €100 million," Krauklis said.

Krauklis also pointed out that Latvia needs to reconsider its own excise hike planned for next month, as such a step might put an end to booze tourism and the money coming in from across the Estonian border. Excise revenue has been lower than expected in Latvia as well, which is why the state needed to reduce the step-by-step increases it is planning, the mayor added.

The context of the current situation needs to be taken into account: "You don't drive 400 km for a bottle. People drive this far because they expect to buy beer, stronger drink, to fill up and so on. If one of these things isn't interesting anymore, they won't drive here either," Krauklis said.

The Estonian government recently published last year's excise duty revenue. Of a total loss of €88 million, some €55 million are due to consumers' changed behavior concerning alcoholic beverages, including thousands crossing the border into Latvia to go shopping there.

Editor: Dario Cavegn

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