Banks, Estonia, Financial Services

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Bank of Estonia considers that the State could increase excise tax on alcohol

Juhan Tere, BC, Tallinn, 22.05.2009.Print version
The Postimees Online: the Deputy Governor of the Bank of Estonia Rein Minka wrote in a letter, being addressed to the Prime Minister and to the Minister for Finances, that Estonia could raise the excise tax on alcohol in order to improve the budgetary balance, writes LETA.

"It should be considered whether the measures on the expense side could be supported with taxation policy measures," stated Minka in the letter. "In such a case, it would be good from the economic policy point of view to base the decisions on the previously established strategic objectives – continuing the attempts to transfer the tax burden from labor force to consumption," stated Minka.

 

"For example, increasing moderately the excise tax rate on tobacco and on alcohol, taking into account the current demand, could be carried out in a way that it would not rule out the possibility to fulfill the Maastricht inflation rate criterion," read Minka's letter to the Prime Minister and to the Minister for Finances.

 

Minka noted that selling State assets as well as including significantly more dividends into the State budget would improve the budgetary position, but these are ad hoc measures. "Besides, implementing such decisions in the current economic environment could be difficult. Thus far the measures taken for decreasing the local governments' budgetary deficit have not yielded any results either," he wrote.






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