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Excise tax on alcohol and tobacco to be increased in Latvia

Nina Kolyako, BC, Riga, 01.10.2008.Print version
Latvia will increase the excise tax on strong spirits and tobacco, as show the amendments to the "Law on Excise Tax", which the government approved yesterday.

The law amendments, prepared by the Ministry of Finance foresee increasing the excise tax on alcoholic beverages from LVL 630 to LVL 705 for each 100 liters of alcohol in their content, which implies that the tax will increase by 11.9 %. According to the ministry's calculations, this will bring an additional LVL 11.8 million to the state budget, reports LETA.


It was underlined that such a step should be evaluated positively from the point of view of society, health and social aspects. Increased tax will also make Latvia's alcohol excise closer to the excise tax in the other two Baltic States. Still, even after the increase, Latvia will have the lowest alcohol excise tax in the Baltic States as in Lithuania it is LVL 909 and in Estonia – LVL 783.


The excise tax will apply equally for the locally produced and imported alcohol, the Ministry of Finance underlined.


The law amendments also foresee increasing excise tax on various tobacco products, classified as "other tobacco" from the current LVL 14 to LVL 23 per each 1,000 grams, thus making equal its excise tax with the tax on "finely cut" tobacco.


The Ministry of Finance pointed out that the increased excise tax on tobacco and alcoholic beverages will have an impact on these products' retail prices, which will consequently go up.


The law still has to be reviewed by Saeima and if it approves it, the law will take effect on December 1, 2008.

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