Prices of alcoholic beverages in Latvian stores not dropping yet

Alcohol store in Ainaži, on the Latvian-Estonian border.
Alcohol store in Ainaži, on the Latvian-Estonian border. Source: ERR

Although the Latvian excise duty on strong alcoholic beverages has been cut by 15 percent, retailers haven't yet lowered prices, as they are still selling the products purchased at the previous tax rate, Henriks Danusevics, president of the Latvian Traders Association, told BNS.

Danusevics explained that retailers could start buying alcoholic beverages at the reduced tax rate only on Aug. 1, which is why prices, except for those in areas bordering with Estonia where alcohol sales are higher, aren't reduced yet.

He added that there have been no reports of increased alcohol consumption following the tax cut.

"This tax change definitely doesn't mean that people will start to drink more like the Health Ministry predicted. The decision to cut the excise tax on alcohol is an opportunity to go for higher-quality alcohol, or to save on the excise difference and buy other products. In the long term, prices on the best-selling alcoholic beverages might go down after the current supplies are sold out," he said, adding that for the time being, 90 percent of alcoholic drinks on the market are still old inventory, on which the higher excise rate has already been paid.

Amendments to the Excise Tax Law that the Saeima passed in their final reading on July 8 entered into effect starting this month, reducing the rate on strong alcoholic drinks by 15 percent.

The reduced tax rate is temporary and implemented to offset the expected negative effects on Latvian business of a recent Estonian excise cut. It will remain in force until Feb. 29, 2020.


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Editor: Dario Cavegn

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