Although the Latvian excise duty on strong alcoholic beverages has been cut by 15%, retailers haven’t yet lowered prices, as they are still selling the products purchased at the previous tax rate, Henriks Danusevics, president of the Latvian Traders Association, announced.
Danusevics explained that retailers could start buying alcoholic beverages at the reduced tax rate only on August 1, which is why prices, except for those in areas bordering with Estonia where alcohol sales were higher, weren’t reduced yet.
He added that there had been no reports of increased alcohol consumption following the tax cut.
“This tax change definitely doesn’t mean that people will start to drink more like the Health Ministry predicted. The decision to cut the excise tax on alcohol is an opportunity to go for higher-quality alcohol, or to save on the excise difference and buy other products. In the long term, prices on the best-selling alcoholic beverages might go down after the current supplies are sold out,” he said, adding that for the time being, 90% of alcoholic drinks on the market were still old inventory, on which the higher excise rate had already been paid.
Amendments to the Excise Tax Law that the Saeima passed in their final reading on July 8 entered into effect starting this month, reducing the rate on strong alcoholic drinks by 15%.
The reduced tax rate is temporary and implemented to offset the expected negative effects on Latvian business of a recent Estonian excise cut. It will remain in force until February 29, 2020. (ERR/Business World Magazine)
