The coalition put a bill before the Riigikogu Monday to reduce excise duties, long the brunt of criticism for driving customers, not only from Estonia but also from Finland, south of the border to Latvian towns such as Valka and Valmiera, by 25 percent. The cuts would come into effect on July 1, if the bill passes.

The Riigikogu started the relevant process concerning the bill, proposed by two of the coalition parties, the right-wing/national conservative Conservative People's Party of Estonia (EKRE) and the conservative Isamaa, on Tuesday.

The excise hikes of recent years were largely associated with the Social Democratic Party (SDE), which is no longer in office.

The Latvian government has already stated that it plans to discuss potential excise cuts in response.

Kari Luoto, managing director of the Finnish Grocery Trade Association, said that without any response from the Finnish side, there is a risk that the share of alcohol imported from Estonia will increase, thus effectively moving the problem northwards, BNS reports.

Thomas Karlsson, specialist at the Finnish National Institute for Health and Welfare, said that on the other hand, the amount of alcohol brought back from Estonia by Finns has fallen in recent years, so the impact originating from the alcohol policy of Estonia should be assessed in Finland before acting. 

The Federation of the Brewing and Soft Drinks Industry in Finland is also of the opinion that if that country wants excise duty revenue to stay in Finland, the country cannot ignore Estonia's planned steps in that sphere.

The accompanying notes on the bill state that lowering excise duties is aimed at giving entrepreneurs an opportunity to cut their own alcohol prices, in order to curb cross-border trade with Latvia, which has been intensifying since 2015, it is reported.

The coalition parties themselves said the move, if it came to fruition, might flip the situation around on the border, boosting trade on the Estonian side, at the expense of Latvia.