Ratas: Excise duty debate across Baltic states, Finland would make sense

Prime Minister Jüri Ratas.
Prime Minister Jüri Ratas. Source: ERR

After Latvian Prime Minister Krišjānis Kariņš called for a pan-Baltic approach to alcohol excise policy, Prime Minister Jüri Ratas (Centre) said on Thursday that Finland should be included in the discussion as well. While Estonia's excise cut, to enter into effect on July 1, means a blow to Latvian business, it will likely promote tourism in Tallinn, as Finns are expected to increasingly come over to shop for cheap booze again.

Ratas said that including Finland would obviously make sense, though he cautioned that the principle of every country setting its own excise duties already defines clear limits.

"Discussions on important topics are good practice in the cooperation among our three countries," Ratas commented existing Baltic discussions in the matter. "We intend to continue them in a peaceful and competent manner as well, as is appropriate for good friends and allies. The base for the discussion to date has been the principle that tax policy, including excise rates, are up to each country individually," Ratas told BNS.

Dealing with the excessive consumption remains an important topic, he added. "It would be good in the present situation to include Finland in the discussion on relevant cooperation as well," he said.

The health ministers of Estonia, Latvia, and Lithuania agreed in May 2017 that there is common ground where the development of alcohol and tobacco policy is concerned, as well as a policy to promote healthier eating habits.

According to Ratas, the agreement outlined good intentions as well as a desire to cooperate in the issue, but never directly addressed tax policy, a statement the prime minister has found himself forced to repeat since the Latvian government expressed its disappointment over the announced excise cut.

"Estonia's decision to lower excise duties on beer, cider, and strong alcohol by 25 percent is aimed at reducing the cross-border trade stemming from rapid increases in excise duties," Ratas said.

In an interview with TV channel LNT, Prime Minister Kariņš said that the three Baltic states should all apply the same excise rate on alcohol. This would serve to avoid what he called "unnecessary wars," and instead, the excise duties could be used as an instrument to promote public health.

Lithuanian finance minister Vilius Šapoka, meanwhile, said that Lithuania has no intention to follow in the footsteps of Estonia and Latvia by cutting excise taxes on alcoholic beverages.

The Latvian Saeima last Thursday agreed in principle on cutting the rate of excise duty tax on alcohol by 15 percent. Altogether 61 MPs supported the bill, while eight parliament members voted against it. The bill will be handled in a second and final reading in an emergency Saeima session still to be called. The bill has been fast-tracked so it can be approved in two readings instead of three, and is widely seen as a countermeasure to the Estonian excise cut.

The planned Latvian cut applies only to strong alcoholic beverages and excludes beer, wine, and other beverages containing less than 22 percent alcohol, BNS wrote on Thursday.


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Editor: Dario Cavegn

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