Latviski English По-русски
Monday 22.07.2019 | Name days: Marija, Marika, Marina

Lithuania holds fire on alcohol excise as Latvia readies reaction to Estonia’s 25% cut

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Linas Jegelevičius for the BNN

The much-praised unity of the Baltics in the 1990s has fallen through multiple times over the countries’ independent history and the last blow to it came this month from Estonia, which unilaterally made a 25 percent cut on alcohol excise tax in bid to lure alcoholic beverage lovers from neighbouring countries.

Latvia said it will be «forced» to respond, «in fact, absolutely against our will», according the head of Latvian government, Krišjānis Kariņš. Meanwhile, the ruling Farmers and Greens-orchestrated Lithuanian government, which has waged a big war against spirit in attempt to bring down alcohol use – related maladies in the country, seems to play a waiting game so far.

Finance ministry: No plans to change alcohol excise tax

Approached by BNN, communications specialists of the Lithuanian Ministry of Finance, were reluctant to comment Estonia’s decision and how a response of Latvia, Lithuania’s northern neighbour, can affect the strict Lithuanian alcohol policies.

On Thursday morning, Daiva Šalc, a communications specialist at the ministry, send BNN a written reply, saying that the ministry is not currently considering any changes to the existing alcohol excise tariffs.

Lithuanian government hiked alcohol excise tax four times over the last four years and the last increase of 10 per cent came on March 1 this year.

According to the amended Lithuanian Law on Excise Duty, excise of 1 832 euros is applied for one hectolitre of pure ethyl alcohol. The average price of 0,5 litre strong alcoholic beverage steeped around 0.39 euro as a result. The jack-up was expected to fill state coffers with additional 5 million euros.

The Government also expected that the measure will help further wean Lithuanians off from the drinking habit. But the Estonians’ lax attitude towards liquor and especially the expected cut in alcohol excise duty in Latvia will compel Lithuania to sooner or later take actions, experts say.

Economist: Lithuanians will go where booze is cheaper

«In terms of international tax competition, Estonia did a right thing to stay competitive and hold and edge over the nearest neighbours, so, logically, with booze in Estonia cheaper, its buyers will favour Estonia over the countries where it is more expensive, including Latvia and Lithuania. But from the point of morality, our northern neighbour did a bad thing, one very selfish.

With excise duty lower, the consumption of alcohol will certainly go up, perhaps in the entire Baltics, where many bad statistics, like suicide rates, mortality on the roads and et cetera, is primarily related to alcohol consumption,» Povilas Gylys, a prominent Lithuanian economist and a former parliamentarian, told BNN.

In his words, Lithuania is losing «awfully a lot» from the differences in prices in Lithuania and neighbouring Poland. «We here know that nearly entire border settlements on weekends go to Poland for cheaper food and other goods. We just cannot stem the flows, which is very bad for our economy,» he accentuated.

Notably, shops offering cheaper booze than in Lithuania are prevalent in Latvia over the countries’ border.

«Imagine, Latvians’ alcohol prices see a considerable drop as a result of a cut in Latvian alcohol excise duty. Then all the dwellers of our border towns, like Joniškis, Biržai, Naujoji Akmenė, Mažeikiai and others, will set on a journey to Latvia,» he pondered.

Politicians snub economic logics

Asked if Lithuania will have to grudgingly lower its alcohol excise tax in order to stay competitive regionally, Rūta Vainienė, economist and head of Lithuania’s Merchandise Enterprise Association, was hesitant.

«This is the question I am asking myself yet. From the economic standpoint, Lithuania has no other choice, but to follow the neighbour’s examples. But considering how avidly the government has been fighting alcohol consumption and its aftermaths in the country, I am not sure we will see immediate actions in the regard. Especially that politicians sometimes do not go by economic logics,» Vainienė underscored to BNN.

«We can just project that, with the tax lowered in Latvia, we will see increasingly more Lithuanians going there for cheaper alcohol. I am not sure however that it will impel our current lawmakers to act upon such situation. What I see is that our politicians in the Parliament simply close their eyes to the fact that our shoppers are streaming behind the border for cheaper goods. I won’t be surprised that Lithuania for now will put up with the alcohol excise tax reduction over its borders,» the analyst said.

Seimas will have to react in one way or another

Linas Balsys, an independent MP, told BNN that no initiative to reduce Lithuanian alcohol excise duty has reached the parliament. «I doubt very much if such a proposition would garner support from the ruling majority that stands firmly for higher alcohol taxes,» he underlined.

Although tax imposing and increasing is an exceptional right of each country, Lithuania cannot pretend that it lives in a «bubble», unaffected by alcohol policy changes in its proximity, Balsys noted however. «I am certain that the Seimas (Parliament) will have to react in one way or another, but it remains to seen how and when,» Balsys said.

The lawmaker, who is a member of the Baltic Assembly, an ultimate advisory body of Lithuanian, Latvian and Estonian legislatures, admitted he was «disappointed» that the Baltic unity was cracking up once again.

«We did discuss common alcohol policies in the Baltics last year. It goes without saying that coordinating actions in such an important field like alcohol policies is essential for all three Baltic countries.

Unfortunately, individual economic interests prevail when it comes to practical decisions,» the MP emphasised.

Resolution of Baltic Assembly defied

In October last year, parliamentarians and governmental representatives from Estonia, Latvia and Lithuania convened for the 37th Session of the Baltic Assembly to discuss current affairs and cooperation of the Baltic States, prioritising alcohol policies. A resolution adopted by the Session highlighted the importance of continued and improved cooperation in alcohol policy.

The resolution called among the other things on more active cooperation in the field of reduction of alcohol consumption and a targeted approach and to implement without a delay agreed decisions stated in the Memorandum of Intent on Cooperation in Reduction of Alcohol Consumption and some other key issues.

Liquor consumption edges down in Lithuania

According to Lithuanian statistics, in 2018, absolute alcohol consumption per resident aged 15 and older amounted to 11.2 litres (by 1.1 litres less than in 2017). In 2018, country’s retail trade and catering enterprises sold 2.9 million dekalitres of spirits (vodka, whisky, brandy and the like), which is by 153 thousand dekalitres (5 per cent) less than in 2017, and 3.4 million dekalitres of wine and fermented beverages, which is by 823 thousand dekalitres (19.5 per cent) less than in 2017.

Just as every year, the bulk of sales fell within beer – 21.9 million dekalitres, or by 1.4 million dekalitres (5.9 per cent) less than in 2017. In 2018, against 2017, retail prices of alcoholic beverages grew by 2.1 per cent, with the largest increase observed in prices of beer produced in Lithuania – 4.8, imported beer – 4, bitter – 3.9, vermouth – 3.8, vodka produced in Lithuania – 3.1 per cent, while whiskey went down in price by 2.5 per cent. The growth in prices of alcoholic beverages was conditioned by a higher excise duty applied since 1 March.

Leave a reply

  1. JD says:

    Unfortunately the journalist did not do his / her job right, and the Lithuanian “economist” commented on something irrelevant without checking the facts. Even after the 25% decline, the alcohol excise on liquor in Estonia will remain slightly higher than in Latvia and on beer more than 70% higher. So the talk of “booze in Estonia cheaper” and “buyers will favour Estonia over the countries where it is more expensive, including Latvia and Lithuania” is utter nonsense.

We have to be patient – Latvian minister about citizen detained in Iran

We have to be patient in the matter concerning Stena Impero tanker’s crew and the Latvian citizen who are detained by Iranian authorities. A lot depends on how political events unravel, says Foreign Affairs Minister Edgars Rinkēvičs.

Committee: potential NEPLP members’ reputation is their promoters’ responsibility

Responsibility for the reputation of potential members of Latvia’s National Electronic Mass Media Council should be taken by organizations that recommend them, said head of 12th Saeima’s Human Rights and Public Affairs Committee Inese Laizāne.

Latvia to test individual budget model to support people with mental disorders

Welfare Ministry and ten municipalities will use EU Social Fund’s co-financing to test a new approach for social service provision to adults suffering from mental disorders. In other countries this approach is known as «individual budget model».

UK in emergency meeting over Iran-seized tanker with Latvia on board

British government members, intelligence and military chefs are holding an emergency meeting over the seizure by Iran of a UK-flagged oil tanker with a Latvian crew member on board in the Persian Gulf.

Latvian lawyer and ex-judge Uldis Bērziņš killed in Mārupe

Lawyer and ex-judge Uldis Bērziņš was killed in Mārupe, Latvia, according to information from LETA.

Audit uncovers a lack of transparency in use of Latvian Agriculture Ministry’s money

Unclear accounting and use of finances, council members with ties to associations assess money allocation for associations, trips to Spain and Italy for no reason, as well as hundreds of projects with no tangible results – State Audit assess use of finances in Agriculture Ministry’s funds.

Estonian President cycles 135 km in amateur Tour de France

Estonian head of state, Kersti Kaljulaid, showed an example of active lifestyle as she cycled 135 kilometres in Étape du Tour de France on Sunday, the amateur stage of the annual bicycle classic.

Latvian minister may consider raising tax on diesel fuel to finance road maintenance

In order to find money to finance road maintenance in Latvia, the option of increasing excise tax for diesel fuel is not entirely excluded, said Latvia’s Transport Minister Tālis Linkaits in an interview to public broadcaster LTV programme Rīta Panorāma on Friday, 22 July.

Court ruling on Estonia ferry disaster seen as big disappointment

The ruling of a French court in a compensation case over the tragic sinking of Estonia ferry in 1994 has been described as a big disappointment by lawyer of the relatives of victims.

Latvian citizen among sailors of British tanker detained by Iran

Among the crew of the British tanker detained by Iran is one Latvian citizen, according to the report from Latvia’s Foreign Affairs Ministry.

Heavy rain expected in Latvia at week’s beginning; air temperature to reach +29° C

The beginning of the week in Latvia will be rainy, as low atmospheric pressure and rain clouds move through Latvia. Nevertheless, at the end of the week air temperature will reach +29 C, as reported by State Environment, Geology and Meteorology.

In Ukrainian parliamentary election, win of Zelenskiy's party coming

Ukraine has held its snap parliamentary election, where, according to exit polls, Servant of the People party lead by Ukrainian President Volodymyr Zelenskiy has won with a clear majority.

Week in Lithuania: CB denies Swedbank’s Syria links, PM Skvernelis to change some ministers

Last week, PM Saulius Skvernelis revealed that the Government mulls taxing property and polluting cars, Lithuanian Railways said it will keep contract with Latvia's Sigmen, Court disqualifies itself from Paleckis case.

BNN summary of the week: Cutting a pie. Minimal wage. Dangerous games

Is there a pleasant aroma of a fresh pie in the air? Judging by events of the past week, the tasty smell of the 2020 budget has already spread across government corridors even though the dough is not ever ready.

Latvia among Baltic States with first quarter’s highest budget deficit

In Q1 2019, the general government budget deficit ratio to GDP in Latvia was higher than the average across the EU, according to data published by Eurostat.

Latvia’s industrial producer price level up 0.4% in June

Compared to May, the level of producer prices in Latvian industry rose by 0.4 % in June 2019. Prices of products sold on the domestic market grew by 1.5 %, but prices of exported products reduced by 0.7 %.

Curious career zigzags. From shipping schemes to a warm seat in Latvian Railway

Shadow of doubt over fraud worth five million euros. Career twists with Lembergs’ approval. Secret peace treaty following Uldis Augulis’ entry to Transport Ministry. Illegal state of monopoly in the industry. What hides behind Latvian Railway chief’s «spotless» reputation?

Estonian TransferWise hires Netflix’s ex-chief financial officer

Estonian-led financial transactions start-up TransferWise has announced expansion of its board of directors with the former chief financial officer of the American online television service Netflix, David Wells.

Ukraine to reform citizenship process following Russian passport move

Volodymyr Zelenskiy, the President of Ukraine, has ordered changes to the process for receving Ukrainian citizenship reacting to a Moscow decree increasing the number of Ukrainians eligible for fast-track Russian passports.

SES: barrels with chemicals found in Baldone are not harmful to people or environment

The barrels found in Baldone containing different chemicals do not present any direct threats to the environment or people, as reported by State Environment Service.

U.S. shoots down Iranian aircraft amid rising tensions in Persian Gulf

With American-Iranian relations being tense, U.S. President Donald Trump stated that an American naval ship had downed an Iranian drone that threatened the ship in the Arabian Sea.

NATO StratCom does not consider FaceApp more dangerous than Facebook

The US Democratic Party is concerned about Russian-made FaceApp, which allows its users to imagine how they might look like when they are old and retired. NATO StratCom, however, does not consider the app to be more dangerous than other apps users entrust their personal data with.

Additional information to be asked for in Latvian prosecutor general’s evaluation

Saeima deputies who initiated the investigation if there are reasons the justify dismissal of Prosecutor General Ēriks Kalnmeiers have been asked to clarify their request by providing more detailed information in relation to conclusions mentioned in their request.

Latvian minister wants more responsibility for the state in children rights protection

The new children’s rights protection model will delegate more functions to the state, said Latvian Welfare Minister Ramona Petraviča.

Scandinavian tourist killers in Morocco convicted to capital punishment

In Morocco, for the murder of two Scandinavian tourists, three Islamic State group supporters have been sentenced to death.