State budget misses €24m, to find which various options are being weighed. A hefty income into state coffers does come from excises. Excises, collected by state from various products, is its way of letting people know – via their purse – which products are not as beneficial and advisable for them, thus for the state, as others.
For instance: the duo of alcohol and tobacco is of the kind that the state so taxes: seeking to control consumption while collecting extra money to (indirectly) pay for future doctor bills of those damaging their health. All looks just and fair.
In Estonia, low-alcohol and strong alcoholic beverages are taxed differently. Alcohol producers have long harboured a measure of enmity; now, with the issue of whether excises ought to be equalised or not, the relations have become much messier. Seeing we are not talking about small money here.
Of all alcohol consumed in Estonia, yearly, two thirds come in the form of low-alcohol beverages; even so, only a third of total excise are collected from these. Strong alcoholic beverages consumed amount to one third, coughing up two thirds of excise. A percent of alcohol in beer is taxed 2.6 times lower than the same in strong alcoholic beverages. Turns out: in 11 months this year, due to tax differences, the state missed €62,364,059. How much, we ask, has failed to be collected over the past decade? Half a billion euros.
Sure: alcohol producers are all fighting for their rights. Strange would it be, indeed, if those saving millions thanks to lower tax rates on low-alcohol beverages should at once gladly give up their savings. Obviously, also, in a small country like Estonia it may easily happen that tax-imposers and payers of it may be connected more closely than advisable. Neither should this mean, however, that friends enjoy exceptional status regarding rules.
Both sides wield arguments hard to counter, the more so that both can produce research supporting their stands – conducted and compiled by two leading Estonian research agencies. While the strong alcohol producers, fighting for equalised taxation, mainly play the justice and on collected millions card, the low-alcohol beverages camp stresses how to control human behaviour by taxes: should beer price rise due to higher excise, it may happen that people, youth included, will be drinking more of the strong stuff.
True: Estonia’s main problems spring from strong alcohol consumption. Still, it is somewhat doubtful, if the slightly higher price of low-alcohol beverages would direct people towards choosing the stronger liquor – or, rather, serve to diminish the amounts of beer sipped. It does indeed seem logical that taxation happen on equal footing – based on alcohol content in beverage, we suggest.