Thursday, May 23, 2024

Increasing Consumption Taxes on Tobacco and Alcohol in Latvia

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According to the news from bb.lv on September 27th, starting from 2024, the consumption tax rates for tobacco products, alcoholic beverages, e-cigarettes and their components, e-cigarette liquid, as well as certain oils specifically designed for use in special economic zones and free ports, will gradually increase each year.

The objective of increasing the consumption tax is to raise more government budget revenue in order to better safeguard and develop various public services, including healthcare, transportation, internal and external security, education system, as well as to reduce retail price discrepancies between substitute products, minimize the impact of consumption on public health, and increase the implementation of the national budget.

According to sources, starting from March 1, 2024, there will be an annual increase in consumption taxes on cigarettes, cigars, tobacco (both finely cut and other types), tobacco leaves, heated tobacco, e-cigarette liquid, and tobacco alternatives. This increase will continue for three years. From January 1, 2025, and 2026, the taxation on these products will be raised annually.

The government plans to increase the annual average tobacco tax by 5.6%, which means the price of a pack of cigarettes will increase by 0.14-0.2 euros. Currently, the tobacco tax for 2023 is approximately 0.14 euros per gram, while cigars and cigarillos are taxed at 0.02 euros, smoking tobacco and tobacco leaves at 0.09 euros, and heat-not-burn tobacco products at 0.22 euros.

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