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Wednesday 21.08.2019 | Name days: Linda, Janīna
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Cross-border trade between Latvia and Estonia declines

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Estonia’s Finance Minister Martin Helme has announced that excise tax revenue from the first month after the rate’s reduction has increased 40% when compared to July 2018, whereas cross-border trade with Latvia has reduced.

«As we can see, excise tax revenue in January, March, May and June was below previous budget expectations. Prior to tax reduction there was a downward pointed tendency for revenue,» Helme announced on social network sites.

June’s decline of revenue is associated with the expected excise tax rate reduction, said the minister.

«In July, we had observed inexplicable exceeding of predictions when compared to both budget estimates and spring’s estimates. The increase when compared to last year’s July was 40%. For strong alcohol it was 174%,» reports Estonia’s finance minister.

He added that cross-border alcohol trade with Latvia has reduced.

«The numbers aren’t big, but it is worth mentioning that cross-border trade is measures in vehicle movement, not the amount of goods brought from Latvia,» the minister’s post states.

The number of Finnish tourists visiting Estonia has increased by a couple of percent, whereas the amount of goods they purchase has doubled. The situation is the opposite on the border with Latvia – the number of Estonian residents travelling to Latvia has declined more slowly than the amount of goods they purchase, Helme reports.

He added that alcohol prices in Estonia had declined in July. August is expected to continue this trend.

«A couple of months should make it clear that our tax rate reduction has increased this year’s tax revenue when compared to what was previously predicted, which was based on the old tax rate. July’s data is promising,» Helme said.

Estonia’s retail trade data shows that trade of strong alcoholic drinks in July had increased 20%.

«Excise tax reduction has had a positive effect on alcohol trade, sales of alcoholic drinks have increased by one-fifth and sales of light alcoholic drinks has increased slightly less,» BNS agency was told by Prisma Peremarket sortiment director Kaimo Niitaru.

Since 1 July, Prisma has reduced prices for more than 400 alcoholic drinks. Niitaru notes that prices will continue reducing until the end of the year, because it is first necessary to reduce stores procured at higher tax rate.

He adds that Prisma stores have reduced prices of light alcoholic drinks by an average of 0.14 EUR/0.5 l, whereas the average reduction of prices of strong alcoholic drinks has reduced 1.5 EUR/0.5 l

Retailer Coop had reduced prices in accordance with excise tax rate and warehouse stores in the first week of July. Prices have declined for more than 900 products.

Coop Eesti communication manager Martin Miido notes that sales of strong alcoholic drinks had increased by a quarter in July, whereas the increase of sales of light alcoholic drinks was slight.

Data compiled by Maxima shows that sales of strong alcoholic drinks in July, when compared to the same month of 2018 had increased 20%. When compared to June – sales had increased 15%.

Maxima Eesti sales manager Kadi Lainelo explains that this year’s summer was cooler than last year’s, whereas sales of light alcoholic drinks has remained unchanged. Traditionally colder summers result in less light alcoholic drinks being consumed. This is why it is allowed that excise tax reduction is observed in this category. She adds that the volume of sales of non-alcoholic drinks has significantly increased, which means «consumers are becoming more responsible and more often pick non-alcoholic products».

On 1 July Maxima reduced prices for 17 most popular products, doing it at the expense of profit. Price reduction continued over the course of the month and will continue reducing in the coming months.

As previously reported, Estonia reduced excise tax for beer, cider and strong alcoholic drinks by 25% on 1 July 2019.


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