Prime Minister Jüri Ratas refuted his Latvian colleague’s claim, according to which Estonia is in breach of an excise duty agreement with its southern neighbor.
“Information from the foreign ministry suggests Estonia has not signed any contracts or agreements based on the foreign communication act for unification or coordination regarding excise duties on alcohol with Latvia to obligate the government to produce either the contract or draft legislation to the Riigikogu,” Ratas (Center) wrote in reply to Reform Party MP Aivar Sõerd.
The PM admitted that former healthcare and labor minister Jevgeni Ossinovski signed a mutual intentions protocol between all three Baltic countries to reduce alcohol and tobacco use and promote healthy eating habits on December 8, 2017.
“A mutual intentions memorandum is not a cooperation agreement in the sense of the foreign communication act nor is it an agreement between governments,” Ratas said.
He went on to say that while the memorandum urges countries to communicate, it entails no obligations to notify the other side of decisions to change duties. The PM said the government has not entered into binding agreements with Latvia for the purpose of hiking or lowering the duties or coordinating the tax rate.
The Latvian Saeima decided yesterday to lower the duty on strong alcohol by 15 percent and maintain the new rate until the end of February next year. The duty on light alcoholic beverages will remain unchanged.
Chairman of the Saeima’s finance committee Martins Bondars said it is possible Latvia will change the rates again after February 29 but that it depends on state budget deliberations and communication between Estonia and Latvia that is needed to avoid an excise duty war. Latvia’s decision follows Estonia slashing its duties on both light and strong alcohol by 25 percent in July. The Latvian finance ministry puts the effect of Estonia’s decision on the country’s state budget at €92 million.
PM of Latvia Arturs Karinš has said that Estonia and Latvia agreed a few years ago that Latvia will hike its duties to move closer to Estonia’s level. Karinš said that Estonia has violated the agreement by slashing duties and that Latvia has no choice but to respond in kind.
Following Karinš’ utterance, Estonia’s Minister of the Interior Mart Helme (EKRE) said that there are no binding agreements during a government press conference.