Latvia planning tit-for-tat alcohol excise cut ({{commentsTotal}})

Alcohol for sale in Valmiera, Latvia, close to the border with Estonia.
Alcohol for sale in Valmiera, Latvia, close to the border with Estonia. Source: Priit Luts/ERR

Following Monday's announcement that a bill to reduce excise duty on alcoholic drinks was to be put to the Riigikogu, Latvia has followed suit in announcing its own proposed excise duty cuts. Estonia's higher excise duties in recent years had contributed to a thriving cross border trade, with customers from Estonia and even Finland traveling to Latvian border towns to stock up, meaning the excise revenue, and business as a whole, left Estonia.

Latvian finance minister Jānis Reirs (New Unity) is to convene a working party next week to look at the issue, ERR's online news in Estonian reports.

"It is important to maintain competitiveness at a regional level, so I see no major problems in lowering alcohol excise duties," Reirs said, without stating what that reduction might be.

The current bill put forward by the Centre-EKRE-Isamaa coalition would reduce excise duties by 25 percent, effective from July 1, it is reported. The Estonian government also plans to increase excise on tobacco by five percent per annum, for the next four years. Previously, a one-off hike of 10 percent had been on the cards.

The Latvian excise duty drop could also come into effect this year, depending on how quickly the coalition government there could agree on the issue, Reirs added. Latvia has been governed by a four-party coalition since January.

The alcohol excise duties, most closely identified with the Social Democratic Party (SDE), which was in the last coalition government down to the end of April, had proved controversial, with the claim that it pushed custom away from Estonia being the most frequent criticism.

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Editor: Andrew Whyte



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