ALCOHOL and DRUG REPORT
Important argument for alcohol excise raises has been Governments need for additional revenues. Excise taxes have been raised for alcohol in August 2015. For spirits +1,7%, wine +9,3%, intermediate products + 10,4%, beer +22,6%. For ciders with absolute alcohol under 6% excise has not been raised. Money was used to finance free meal for 4 th grade pupils.
Additional tax raises have been planned until 2018. Source: Ministry of Finance
Alcohol price war with Estonia
On June 13, 2019, the Estonian Riigikogu voted 70-9 in favour of a bill that lowered the alcohol excise duty rates for beer, cider and hard liquor by 25 per cent beginning July 1. The letter of explanation accompanying the bill noted that with the lowering of alcohol excise duty rates, businesses will be given the opportunity to reduce alcohol prices in order to bring cross-border trade with Latvia under control.
On July 8, 2019, the Latvian Saeima passed amendments to Latvia's excise tax law in response to Estonia's decision. A 15 per cent lower excise duty rate on strong liquor entered into effect in Latvia on August 1. It’s a temporary cut until February 29, 2020 that means Latvia remains cheaper for alcohol than Estonia.
From March 1 2020, excise tax would increase for wine, brewed beverages (over 6%) and intermediate products (up to 15%) per 100 litres – excise tax would increase from EUR 101 to EUR 111, for intermediate products (over 15% and up to 22%) per 100 litres – from EUR 168 to EUR 185, whereas for spirit and other alcoholic beverages per 100 litres of absolute spirit the excise tax would increase from EUR 1 564 to EUR 2 025. The excise tax for beer would increase from EUR 7.4 to EUR 8.1 per 100 litres.
In January 2020 lawmakers from Latvia's New Conservative Party (JKP) and the Who Owns The State (KPV LV) party, which are both part of the country's incumbent coalition government, initiated talks with their political partners to mitigate the planned excise tax hike on alcohol. According to the national tax agency admitted that if the new excise tax rate for alcohol comes to force March 1, it will increase the price of strong alcohol by three euros, creating a risk of increasing activity for the illegal market. After the meeting in January 6 the head of the sub-committee Iveta Benhena-Bēkena told journalists that there is a possibility of slowing excise tax climb in March, adding that her political party would be ready to offer the coalition something to talk about.