Estonian parlt passes bill increasing excise duties on alcohol, tobacco products

Estonian parlt passes bill increasing excise duties on alcohol, tobacco products. Photo: Eero Vabamägi

At an extraordinary sitting on Monday, the Estonian parliament passed a bill tied to a vote of confidence in the government and aimed at increasing the excise duty rates for alcohol and tobacco products for the purpose of boosting excise revenues and influencing the availability of the said products.

57 MPs voted in favor of the government-initiated amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act, and 35 against, the parliament's press service reported.

The excise duty on alcohol, which was last raised in 2018, will increase by 5 percent per year in 2024-2026, according to the law. The excise duty on cigarettes and smoking tobacco, which has been raised by 5 percent per year in recent years, will also increase by the same amount in 2024-2026. The excise duty on tobacco liquids will also grow by 5 percent per year over the next three years, and the minimum payable excise duty will increase by the same amount for cigars and cigarillos.

The law establishes ranges of retail prices for cigars and cigarillos in order to reduce the abundance of different prices and thereby reduce the workload for businesses and tax administrators. Prior to second reading, the government made a change to the bill so that the maximum retail price of cigars and cigarillos will be announced with a precision of 10 cents instead of the previously planned 50 cents if their price is up to 10 euros.

The planned increases in the excise duty on special purpose diesel fuel for 2024-2027 will be cancelled in order to support the competitiveness of Estonian agricultural producers. This means that the excise rate for special purpose diesel fuel will remain at 21 euros per 1,000 liters.

The bill passed first reading on May 17, and 230 motions to amend the bill were submitted by the deadline. On June 8, the government decided to tie the adoption of the bill to a vote of confidence prior to second reading, thereby also taking over the obligations of the lead committee. Amendments submitted to a bill associated with a vote of confidence in the government are not put to a vote.