Estonians add €8.5m to Latvian budget by buying alcohol, says study

The Estonian Institute of Economic Research (EKI) estimates that approximately EUR 8.5 million of revenue generated by Estonians' alcohol purchases flowed into the Latvian state budget last year.

The sum corresponds to 3.4% of Estonia's alcohol excise duty intake.

EKI presented on Monday the findings of a cross-border trade-themed study commissioned by the Estonian Chamber of Commerce and Industry. It appears that an average of 50 liters of beer, 13 liters of cider, 10 liters of vodka, 7 liters of long drinks, 6 liters of wine and 5 liters of spirits other than vodka per head of population was bought in Latvia last year.

Some 39% of the people who traveled specifically to Latvia to buy booze spent more than €100 on alcohol per trip.

The Estonian and Latvian excise duty rates did not differ much earlier but a gap sprung up in 2015 when Estonia increased the alcohol excise duty rate by 15%, EKI director Marje Josing said.

Besides alcoholic beverages other goods were often purchased in Latvia last year. Thus, food products were bought by 51% of the people who traveled to Latvia for alcohol, motor fuel by 24%, tobacco products by 18%, building materials by 17%, and other goods such as clothing, footwear, home appliances, etc., by 8%.

Even 21% of Estonia's adult residents plan to travel to Latvia to buy alcohol this year. The corresponding percentage among those Estonians who brought alcoholic beverages from the neighboring country last year was 64%.

Josing also presented the results of an alcohol-themed survey in Finland. The Finnish government plans to reduce the restrictions set out in alcohol laws and the Finnish study showed that after the changes are implemented Finns' alcohol purchases in Estonia would fall 27%. Estonia's forthcoming excise duty hikes had not yet been taken into consideration when the survey was taken, Josing noted.

Estonians routinely make it across the border to buy alcohol in Latvia. Recently ERR reported that up to six stores might be closing in southern Estonia due to people choosing to shop in Latvia.

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