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

It was agreed that the spending will amount to 89 billion kroons and the revenue volume will be 84 billion kroons. If the decision of the government is finalised, next year the excise tax on alcohol will increase by ten percent and excise tax on tobacco will be raised by 20 percent by the beginning of 2011.

Finance Minister Jürgen Ligi said that the tobacco excise tax has to increase by the beginning of 2011 by 20 percent as compared to the current level.

The Riigikogu decided already in summer that the tobacco excise tax will increase by 5 percent from January 1, 2010, i.e. by an average of 1 kroon per pack. A 20 percent tobacco excise tax increase means that by the beginning of 2011 latest, a pack of cigarettes will cost 4-5 kroons more than it does now. Finance Minister Jürgen Ligi did not rule out the possibility that the time schedule may be brought forward either.

Although the government hopes to get around 650 million kroons from raising alcohol and tobacco excise tax next year, Ligi hoped that the excise tax increase has a positive influence in this year’s budget context too. Earlier experience has shown that a month or two before the excise tax increase, the sale of alcohol and tobacco products will surge and thus, more excise tax will be collected. Ligi said that thus the excise tax increase will add a bit certainty that Estonia’s this year’s budget will fit into the criteria necessary to join the Euro.