Alcohol, Estonia, Latvia, Markets and Companies

"Cross-border trade on the border with Latvia is becoming an ever more serious tax problem month after month, and we are making constant efforts to raise awareness of this among politicians and officials. Starting from January sales via stores on the Latvian side of the border have doubled every month and Estonia stands to forgo 15-20 mln euros in alcohol taxes alone this year," the manager of the association, Nele Peil, said.

Peil said the government was mistaken in its belief that reduced alcohol sales at selling points in Estonia is a result of rapidly declining consumption. As a matter of fact, it is a result of a tremendous surge in cross-border trade, she said.

Peil also said cross-border trade and consumption of illicit alcohol are calling into question the survival of small rural stores, whereas large retail chains have warned that losing a big chunk of the alcohol market may force them to increase markup on food.

The association maintains that the solution is to reverse the hike in the excise duty carried out in 2016 and to raise the duty in the future at the same rate as people's wages are moving higher, instead of perceiving the alcohol excise duty as an inexhaustible source of revenue tapping into which has no side effects.

Starting from March, the inflow of excise duty revenue into the state budget has been constantly smaller by approximately 10% than in the same month last year, Peil added.

The data by the Estonian Alcohol Producers and Alcohol Importers Association is based on sales data of the association's members in the first half of this year, and their orders and forecasts for the full year.