Ansip: current alcohol and tobacco excise taxes are optimal

TALLINN - Estonian Prime Minster Andrus Ansip expressed an opinion at the Riigikogu on Wednesday that although Estonia has one of the highest alcohol excise taxes in Europe, the tax rates of our excise goods are, all in all, optimal, Postimees Online reports.

"With alcohol, Estonia's excise taxes are higher rather than lower in the European comparison. The final price of alcohol in Estonia among 27 member states of the union is on the 10th place in costliness," Ansip said.

Ansip said that one of the major aims of excise tax is to reduce consumption of products harmful for health but the excise rates have to be on a reasonable level so that they wouldn’t facilitate illegal trade.

"Taxing two times higher is apparently not possible since then no one would buy that Estonian excise product and the whole market would became illegal and alcohol would be imported from elsewhere," said Ansip.

The prime minister explained that excise tax rates are determined on the basis of European Union minimum rates. "We haven’t yet achieved the minimum rate regarding tobacco. Tobacco excise tax rate will increase by 6 percent in the next two years and then we will achieve the European Union tobacco excise tax minimum rate designated for 2014," he said.

Centre Party MP Viktor Vassiljev asked the prime minster how the state could guarantee that alcohol and tobacco excise taxes are used to compensate the damages that these products cause for health. "I certainly don’t consider it possible to peg costs to specific sources of budget income to a bigger extent," said Ansip.