Latvian government supports steeper excise tax hike on fuel, cigarettes and alcohol

RIGA – The Latvian Cabinet of Ministers today supported amendments to the Law on Excise Tax, providing for a steeper excise tax hike on fuel, cigarettes, and alcohol.

According to the amendments, the excise tax on lead-free petrol will be raised by 7.8 percent – from EUR 436 to EUR 470 per 1,000 liters in 2018. Excise tax on leaded petrol will be raised by 24 percent – from EUR 455.3 to EUR 564 per 1,000 liters.

Excise tax on diesel fuel will be raised by 11 percent – from EUR 341 to EUR 378 per 1,000 liters, while excise tax on liquefied petroleum gas will be increased by 12 percent – from EUR 231 to EUR 205 per 1,000 liters.

Excise tax on cigarettes should be raised by 5.5 percent – from EUR 67 to EUR 70.7 per 1,000 cigarettes.

Excise tax on wine will be increased by 18 percent – from EUR 78 to EUR 92 per 100 liters. Excise tax on beer might grow 24 percent – from EUR 4.5 to EUR 5.6 per percentage of absolute alcohol by volume. Changes in the excise tax on alcohol might be effective as of July 1, 2018.

According to the Economics Ministry’s estimates, inflation might grow by 0.4-0,5 percentage points a year as a result of the excise tax hike, therefore Economics Minister Arvils Aseradens called on the Finance Ministry to closely follow consumer price changes.

The Cabinet of Ministers today are revising the remaining bills related to tax reform – amendments to the Law on Personal Income Tax, the Law on Solidarity Tax, the Law on Excise Tax, the Law on State Social Insurance, the Law on Corporate Income Tax, and Micro Enterprise Tax Law.

After the government adopts the amendments, they will be sent to Saeima who might adopt the bills in the second reading on July 21.