Following the reduction of the alcohol excise duty rate in Estonia on July 1, alcohol excise duty receipts grew 40 percent on year last month and cross-border trade with Latvia had fallen, Minister of Finance Martin Helme (EKRE) said on Wednesday.
"As we can see, excise duty receipts were below the levels projected in the estimated budget as well as in the spring economic forecast in January, March, May and June," Helme wrote on social media. "Thus, prior to the tax change, we were on course for a revenue shortfall."
The June revenue shortfall could be attributed to imminent tax cuts, he added.
"In July, however, we can observe a clear overperformance compared with both the estimated budget as well as the spring prognosis," the minister continued. "Compared to last July, growth totaled 40 percent, and has doubled for strong liquor at 174 percent."
He also noted that border-crossing volumes at the Latvian border have also gone down.
"The numbers aren't big, but it is worth noting that border crossing is measured in the movement of cars, not in how much goods they have purchased in Latvia," Helme said.
While the number of Finns visiting Estonia has only increased by a couple of percent, the amount of goods purchased by them has doubled. A reverse of this has been observed with regard to Estonians' visits to Latvia — the number of Estonians' trips to Latvia has decreased at a slower rate than their purchases in Latvia, he explained.
The price of alcohol in Estonian stores was lowered as of July 1, and according to Helme, the trends in question can be expected to continue in August.
"It should become clear within a couple of months whether or not our tax cut has already produced a higher tax revenue this year than the expected revenue based on the old rate. July numbers promise it will!"
Editor: Aili Vahtla