Alcohol, Employment, Financial Services, Latvia, Legislation, Markets and Companies

The association said that excise tax on beer had grown by 45% over the last three years but the industry had been able to cope with that because the tax had been raised gradually. However, many breweries may fail to survive the planned tax hike by 50% over a year.

"Actions by certain politicians are absolutely destructive as they threaten existence of the beer industry in the long-term," the association said, pointing out that domestic consumption was declining and the industry had been teetering on the break-even point for several years already. A steep excise tax hike will make some breweries to lay off staff and would mean the end of small breweries in the regions.

The Latvian beer industry currently give jobs to some 1,500 people, not counting the related sectors that will also be affected by the decrease in beer sales following the excise tax increase.

The Latvian parliamentary committee on budget and finances (taxes) yesterday upheld the proposal for an excise tax hike on beer and cigarettes at a steeper rate than was planned before. It was agreed to increase excise tax on beer to EUR 6.8 per%age of absolute alcohol by volume in spring 2018 and to further increase the tax rate to EUR 7.4 per 100 liters of beer in 2019 and to EUR 8.1 in 2020.

The parliament is to discuss the proposal in the final reading later today along with other proposals comprising the tax reform legislative package.