RIGA (Reuters) – Latvia’s parliament approved a plan on Monday to cut the tax on strong alcoholic drinks by 15%, the latest move in a battle for “booze tourists” from Finland and Estonia, a week after its Baltic neighbor Estonia slashed its own liquor tax by 25%.
The cross-border alcohol trade is worth around 45 million euros ($50.5 million) for Latvia alone, as large liquor stores on the Latvian-Estonian border vie for customers. Shops there sold some 40.5 million liters (10.7 mln gallons) of alcoholic drinks last year, the Estonian Breweries Association said.
Latvia - Move - Loss - Tax - Revenues
Latvia’s move will mean a 70-million-euro loss in its tax revenues, but taking no action would have meant a loss of 92 million euros as more trade moved to Estonia, the government in Riga said.
Estonia’s government expects a loss of 12 million euros in tax revenues this year due to its tax cut but sees rising sales volumes helping it recoup 3 million euros a year.
Alcohol - Prices - Latvia - Estonia
Alcohol prices in Latvia will remain lower than in Estonia.
Shoppers outside a store near the town of Ainazi on the Latvian side of the border could be seen on Monday loading up the trunks of their cars or arriving in vans, most with Estonian and Finnish license plates, to buy cheap beer and spirits.
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