Survey: Estonia's VAT increase to again trigger shopping trips to Latvia

TALLINN - A survey commissioned by Citadele bank reveals that a large number of people in Estonia are planning to go shopping in Latvia as a result of the recent increase in VAT.

From January 1, the VAT rate in Estonia rose to 22 percent from the previous 20 percent. As a result, Citadele bank commissioned a survey in which an answer was sought to the question of whether, as a result of the increase in VAT, people are planning to go shopping in neighboring countries more than before.

Almost half of the respondents, or 47 percent, answered that they had not thought about it. Of the people who had thought about this question in advance, 59 percent answered that they do not plan to go shopping in neighboring countries as a result of the VAT hike, while 41 percent of the respondents have already thought out a plan.

Of the people who previously thought about shopping more in neighboring countries due to the increase in VAT, 2 percent of the respondents plan to visit Finland, 21 percent of the respondents plan to visit Latvia, and 18 percent of the respondents plan to visit both Finland and Latvia. The survey shows that there are twice as many men than women among those going on shopping trips to Latvia this year.

It turns out that the people of Valga County are going to cross the border a lot in the new year, that is, nearly two-thirds of the people of Valga County plan to go shopping in Latvia this year. Valga County is followed by Rapla County and Parnu County, where nearly a third of people plan to go shopping in Latvia more than before.

Altogether 29 percent of people in Harju County plan to shop more than before in Finland and Latvia due to the increase in VAT, while the share in Tartu County was 20 percent.

Marina Hakiainen, head of retail banking at Citadele's Estonian branch, said that going on a shopping trip to a neighboring country may not pay off from the point of view of the total cost.

"Prices in Estonia will likely rise slightly due to an increase in VAT and, for example, going shopping in Latvia may seem attractive today, but at the same time, taking into account both fuel consumption and eating out, it may no longer pay off. It is certainly possible to save significantly more money and time during local discount campaigns than when shopping in a neighboring country," Hakiainen said.

The survey commissioned by Citadele bank was conducted in three Baltic countries by pollster Norstat, a total of 1,000 people were interviewed in each country.