Finance Ministry proposes steeper excise hike on alcohol, cigarettes

The Finance Ministry proposes raising excise tax on alcoholic beverages, beer and cigarettes at a steeper rate than originally planned, according draft amendments to the Excise Tax Law, submitted for the final reading in Saeima.

The Finance Ministry argues that the tax hike is necessary as the government is planning higher corporate income tax deductions for charitable donations. The Finance Ministry therefore proposes raising the excise tax rate on alcoholic beverages, beer and cigarettes faster by setting the tax rates that were planned for 2019 already in 2018 and the rates that were planned for 2020 in 2019.

According to the ministry's proposal, the excise tax rate on cigarettes would be set at EUR 78.7 per 1,000 cigarettes instead of EUR 70.7 per 1,000 cigarettes.

The excise tax on beer would be raised to EUR 6.8 per percentage of absolute alcohol by volume instead of the originally planned EUR 5.6.

Excise tax on other alcoholic beverages would be raised to EUR 1,670 per percentage of absolute alcohol instead of EUR 1,450.

As reported, Saeima passed amendments to the Law on Excise Tax, providing for a steeper excise tax hike on fuel, cigarettes and alcohol in the first reading on July 11.

It was planned that the excise tax on cigarettes by 5.5 percent – from EUR 67 to EUR 70.7 per 1,000 cigarettes as of July 1, 2018.

Excise tax on wine would be increased by 18 percent – from EUR 78 to EUR 92 per 100 liters. Excise tax on beer would grow 24 percent – from EUR 4.5 to EUR 5.6 per percentage of absolute alcohol by volume. Changes in excise tax were supposed to come into effect on July 1, 2018.

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