Alcohol, Analytics, Estonia, Financial Services, Latvia, Markets and Companies

"The Estonian Tax and Customs Board estimates that in five months short-term visitors to Latvia have brought approximately half a million liters more of beer to Estonia than last year. This accounts for a very small part of total consumption of beer in Estonia," spokesman for the Ministry of Finance Siiri Suutre told BNS. "Approximately up to 2 million liters of beer has been brought to Estonia from Latvia in the first half of this year," Suutre said.

This position is also supported by Latvian statistics. As the alcohol bought as part of cross-border trade must be reflected in the tax revenue earned by Latvia, then the increase in cross-border trade to millions of liters this year should be highlighted in the tax receipts, which it is not.

The Latvian Tax Board last week said that in the first five months of this year 59.9 million liters of beer has been allowed for consumption or retail sale in Latvia, which is 0.6% more than at the same time last year.

Peeter Vork, head of the Estonian Breweries Association, which helped calculate the figures published on Tuesday, was unable to explain this anomaly. He said that June will perhaps bring about change, but admitted that it is not realistic to assume that cross-border trade would have skyrocketed in June.

The Estonian Food Industry Association on Tuesday announced its calculations, according to which 9.7 million liters of alcohol was brought into Estonia in the first six months of this year, of which 7.1 million liters was beer.

The association estimated that all in all, alcohol brought in as part of cross-border trade could account for 17% of total consumption this year, increasing to 48% next year. The association did not explicitly explain where those assumptions came from.

In the same calculations, the association also highlighted how much tax revenue Estonia may lose due to cross-border trade.

"The Republic of Estonia this year will lose approximately EUR 68 million in excise tax and VAT and the estimated tax revenue lost in 2018 is already up to EUR 150-170 million per year, a sum which could be used to build a four-lane highway between Tallinn and Tartu in three years," the association said.

This is misleading statistics, as in reality the association's calculations show that if the assumptions hold, Estonia this year would lose EUR 22 million in tax revenue and EUR 22.6 million in tax revenue next year. This is altogether EUR 44.6 million, which is far from the figures highlighted by the association.

The Finance Ministry estimates that cross-border trade this year will decrease tax receipts by EUR 22 million, but budget receipts will increase by EUR 25 million as a result of hikes in excise duty. All in all, the association estimates that hikes in excise duty will decrease tax receipts by EUR 22 million, while the ministry estimates that it will actually increase by EUR 25 million.