Alcohol, Latvia, Legislation, Markets and Companies, Taxation

The excise tax on beer will be LVL 2.18 per per volume% for 100 liters of beer, and it will be hiked from the current LVL 825 (per each 100 liters of absolute alcohol content) to LVL 890, writes LETA.

At the debates in Saeima, Juris Sokolovskis (For Human Rights in a United Latvia) was brief and to the point: "I would like to remind you a quotation from the [novel] "The Good Soldier Svejk": "The government, which decides to raise the price on beer, will not last long." "

Previously, at the Saeima Budget and Finance Committee's meeting, breweries' representatives informed committee members that if the excise tax on beer is raised 2.4 times (to LVL 3.48), beer sales will drop at least 40%, which means that breweries will have to lay off at least 300 workers.

Such a hike in the tax rate will also result in at least an LVL 3 million decrease in value-added tax revenue, revenue from social tax and corporate tax will also decrease. Instead of the expected LVL 3.8 million increase in revenue, the budget will actually lose LVL 5 million, beer producers said, pointing out that excise tax on beer in Lithuania is just 20% higher than in Latvia.

As reported, the government earlier said that excise tax on beer would be hiked from LVL 1.45 to LVL 3.48 per volume percent for 100 liters of beer. The government said that it would bring in an extra LVL 3.8 million in the budget.

In Lithuania the tax rate is LVL 1.73, whereas in Estonia LVL 3.48 – although the tax in Estonia was increased gradually, not within one year as the Latvian government is now planning, the breweries said.

Finance Ministry representatives informed the committee members that now the government is planning to raise the excise tax on beer to LVL 1.73 per volume% in each 100 liters of beer, which is as much as in Lithuania, whereas the excise tax on liquor would be raised from the current LVL 8.25 to LVL 8.9. The increased excise tax on liquor will nevertheless be the smallest in the Baltic countries.

This will achieve the same fiscal effect as the government originally planned, said the Finance Ministry.