In the third reading, the Estonian parliament passed a bill to reduce excise duties on beer, cider and spirits by 25%. It will come into force on July 1, the press service of the country's highest legislative body reports.

“Excise duties on beer, cider and strong alcoholic beverages will be reduced by 25% from July 1. 70 MPs voted for the adoption of the bill, and nine people's elected representatives voted against it,” the statement reads.

The ruling parties estimate that such a reduction will enable entrepreneurs to lower prices for alcohol in order to limit cross-border trade, which has been on the rise from 2015. If alcohol becomes cheaper, the volume of alcoholic beverages purchased by Estonians in Latvia will decrease, while the volume of such products purchased in Estonia will increase, the authors of the bill believe.

A sharp increase in excise duties on alcohol and motor fuel in Estonia in recent years has contributed to the development of cross-border trade: a significant difference in the cost of excise goods made many Estonians buy alcohol and fuel for their cars in Latvia.

In addition, the difference in alcohol excise rates between Estonia and Finland has continued to decline in recent years. This has led to the fact that the northern neighbors buy less alcohol in Estonia, and it means less tax revenues to the state budget.

Estonia’s Ministry of Finance estimates that, after the reduction of excise duties, the volume of cross-border alcohol trade will decrease by 80%, including beer — by 45%, while sales of beer to Finnish tourists in Estonia will grow by 20%, and other alcohol — by 35%. Domestic alcohol consumption will rise by about 5%.

Financial forecasts show that this year the budget will not receive 12 million euros due to the reduction of excise duties, but additional budget revenues will amount to 3 million euros per year in the next four years due to higher turnover tax revenues with increased sales on the domestic market.