Estonia Considers Liquor Tax Hike

Estonia is planning to raise its taxation of alcoholic beverages in next year’s budget. During a visit to Helsinki on Wednesday, Estonian Prime Minister Juhan Parts said that the tax hikes could lead to an increase of about 20 percent in the price of hard liquor.

The Estonians cite public health reasons for the increase. The move would also bring an estimated half billion Estonian kroon in revenues to the state.

“There is much talk in our country about ways to make alcohol policy more effective. The raising of the tax on alcohol by degrees could be one way. A decision on this will be made in the late summer in connection with the budget.” Pärts said.

There are fears that higher prices of alcohol could boost the black market, home distillation, and the use of poisonous substitutes. Pärts says that all of these factors have to be considered, but that the direction is quite clear.

Finnish Prime Minister Matti Vanhanen said that Finland has hoped that Estonia would raise its alcohol taxes, and says that such a move would make it possible for Finland to follow suit.

Retail prices for alcoholic beverages dropped sharply in March this year following a tax cut. A key reason for the move was to head off a flood of unrestricted personal imports from Estonia, which joined the European Union at the beginning of this month.

Public health officials are concerned with a surge in alcohol consumption after the fall in prices. Prime Minister Vanhanen said that the Government would re-examine the situation after the summer.

YLE 24, Finnish News Agency