Bill to reduce excise duty hike on tobacco passes first reading

Packs of cigarettes with health warnings displayed at a store. Source: (Mihkel Maripuu/Postimees/Scanpix)

A bill seeking to lower next year's planned 10-percent excise duty hike on cigarettes to five percent and increase the maximum production volume allowed for small breweries passed first reading in the Riigikogu on Tuesday.

The bill initiated by the government seeks to amend the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act, the Social Tax Act, the Income Tax Act and other related laws would change the excise duty rates imposed on cigarettes and smoking tobacco, incentives for small breweries and the definition of heated tobacco products.

If the bill passes, the production limit for small breweries would be increased from 0.6 million liters to 1.5 million liter per year to give entrepreneurs a chance to make plans for long-term investments.

The planned 10-percent excise duty hike on cigarettes for 2020 will be lowered to five percent in order to continuously curb cross-border trade with Latvia. The bill also lays down yearly 5-percent excise duty increases on cigarettes for 2021-2023.

Increase in the excise duty on smoking tobacco will remain unchanged in 2020 at 8.3 percent, so that the excise duty receipts therefrom should equal two thirds of the minimum tax inflow from cigarette sales. The excise duty on smoking tobacco is also to increase 5 percent in 2022 and 2023.


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Editor: Helen Wright

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