Lithuania - Pricing
Lithuanian government decided to raise the alcohol taxes from March 2017 as part of wider efforts to fight alcohol problems in the country. The highest increases were in the excise tax rates for wine and beer, at up to 112%. The rate for ethyl alcohol went up by around 23%. The final prices increased approximately for wine by 53 euro cents, for beer by 14 euro cents and for other strong drinks by 72 euro cents.
While the tax revenue decreased in a number of following months, in August 2018, the State Tax Inspectorate announced that alcohol excise duties declared in January-August of 2018 amounted to $ 206.926 million which was 3% more than at the same time in 2017 (EUR 200,864 million).
The total income from alcohol taxes rose nearly 5% in 2018, with more than half of it collected on spirits. Alcohol excise duty declared in 2018 amounted to 326.8 million EUR - 4.9% more than in 2017 when it was 311.5 mln. EUR.
Spirit drinks excise revenue rose 5% in 2018 to 197.6 million EUR. Beer, 5.2% up to 85.4 mln. EUR, wine - 11.6% to 36.4 mln. EUR and interim product excise revenue fell by 21.3% in 2018 to $ 7.4 million EUR.
According to the latest data from the State Tax Inspectorate alcohol excise duties declared in January-February of 2019 amounted to 97,220 million EUR. This is 2.3 times more than at the same time in 2018 (EUR 42.370 million). Spirit drinks excise revenue increased 3.1 times to 80.287 million. Beer was almost unchanged at EUR 11.475 million. Wine increased by 4 per cent. to 4.416 million and intermediate products - 12 per cent 1.042 million euros.
In December 2018 members of the Seimas approved the proposal of the Minister of Health Aurelius Veryga that the excise duty rate on strong alcoholic beverages should increase by 10 per cent starting from March 2019. It was forecasted that the price of 0.5 litres of alcoholic beverages could rise on average by about 0.39 euros, and as a result, the State budget would raise approximately 5 million euros in 2019.
Excise duty rates on ethyl alcohol and alcoholic beverages have been raised annually for four consecutive years, from 2014-2017. According to the State Tax Inspectorate (STI), the market for wine and other fermented beverages has shrunk by about 30 per cent, intermediate products by 68 per cent, beer by 17 per cent, and ethyl alcohol by only 4 per cent over four years.
Deputy Chief of the State Tax Inspectorate, Artūras Klerauskas, said the government's plan to reduce the amount of alcohol and tobacco sold, but at the same time to keep the excise revenue collected, is paying off. “Due to the increase in rates, more funds are being collected from excise duties. The task of the government is to balance public health and raise as much money as possible for excise, and that plan is still in place, ”Klerauskas told LRT.lt.
Different experiences in Lithuania and Estonia
Two of the Baltic countries, Lithuania and Estonia, introduced steep tax increases for alcohol in 2017, more precisely for beer. As can be seen from the graph below, their experience has been rather different. Estonia has struggled with cross-border trade with Latvia and lost a significant part of the alcohol market and taxes to Latvia. At the same time, Lithuania has increased its revenue.
To widen the prespective it is also important to remember the different tax rates that these countries had for beer prior to 2017 tax increases.
Estonia - 6.29
Latvia - 3.10
Lithuania - 2.49