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  • Lauri Beekmann

LATVIA: The Saeima sets a more moderate increase in excise duty on alcoholic beverages

The increase in excise duty rates for alcoholic beverages, which is scheduled for March 1, is expected to be more moderate. This is foreseen in the final amendments to the Law on Excise Duty passed by the Saeima on Thursday, 20 February.

From March 1, the excise tax rate will be increased by an average of five per cent. A similar rise is planned for 2021.

Iveta Benhena-Bēkena, deputy chairman of the Budget and Finance (Tax) Commission, responsible for the progress of the amendments in the Saeima, noted earlier that the excise tax rate on alcoholic beverages would increase significantly as a result of earlier decisions. ‘Decisions must be pragmatic, balanced and proportionate. These changes are important because the last quarter’s data show a direct decline in domestic sales. That means responding to Estonia’s excise tax policy, ”said Benhena-Bēkena, noting that the proposal to raise rates more evenly was supported.

Amendments to the law are being proposed because the rate would increase sharply for spirits by 29.5 per cent from March 1, while beer, wine, fermented beverages with more than six per cent alcohol and intermediates would increase the rate by an average of 10 per cent. Maintaining such a rate increase would reduce the projected budget revenue by around EUR 30 million annually, according to the annotation to the amendments.

Raising excise duty rates for one litre of strong alcohol – excise tax plus value-added tax – is expected to increase by 0.38 euros this year and 0.40 euros in 2021, while the tax share for wine would increase by 0.06 euros each year per litre. The tax on beer, on the other hand, would increase by EUR 0.03 per litre.

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