Alcohol, Estonia, Financial Services, Legislation, Markets and Companies, Taxation

Estonian strong alcohol producer AS Liviko announced this week that it made 18 people redundant and introduced partial work for the first quarter because of the abrupt increase in excise taxes, as the state increased the alcohol excise tax this year by 15% instead of the initially planned 5%. Other alcohol producers warned that the excise tax hike will increase contraband trade and bringing alcohol from Latvia.

"To lay off workers is undoubtedly a difficult decision, but the reasons for this should not be searched in the 15% excise tax rates rise from the beginning of this year. The reasons are elsewhere. It is not fair to show the risks the company has taken and management decisions that proved to be harmful later, as the results of activities of the state," wrote Ministry of Finance Customs and Excise Policy Department Head Marek Uusküla in the ministry's blog.

He thinks that it is just inappropriate to blame the state again in the excessively fast and sharp increase of excise tax rates. He stressed that the increase in excise rates is now known in advance for years, and the reasons are also given.

"Alcohol excise tax is a consumption tax, which is paid by the end user, not the company. According to the government's action plan, excise tax rates are increased to protect the health and to reduce the accessibility of products that harm the health," explained Uusküla.

He added that the interest of companies to produce and sell more alcoholic beverages and the desire of consumers to pay less for them does not outweigh the harm to health resulting from the consumption of alcohol or alcohol-related deaths.