Lithuania’s Finance Ministry has proposed raising excise duties on alcohol and tobacco. Tax hikes would be implemented for three consecutive years, starting in 2025.
On Wednesday, the ministry presented its three-year plan on increasing excise duties, and expects to be adopted by the parliament, Seimas, during its spring session.
Finance Minister Gintarė Skaistė says the proposal is aimed at cutting consumption and preventing alcohol and tobacco from becoming more affordable amid rising incomes.
“As wages rise and prices continue to rise, the excise share within the price becomes relatively smaller. Therefore, to ensure that the relative share of excise revenue in the revenue structure of the state budget does not drop, we need an annual increase plan,” Skaistė told reporters. “This ensures that affordability does not rise sharply and that consumption also tends to fall or remains stable.”
By limiting consumption, the tax hikes would also contribute to health targets, she added.
According to the finance minister, the rise in average wages in recent years has enabled people to buy more alcohol and tobacco products. Alcohol consumption has gone down slightly in recent years, while tobacco consumption, including both cigarettes and heated tobacco products, has gone up.
The increase in excise duties is estimated to raise 126.7 million euros over three years.
Higher alcohol and tobacco prices
Excise duty on ethyl alcohol would rise by 5 percent from next year, and that on wine and other fermented beverages would increase by around 10 percent, and excise duty on beer would go up by 10 percent.
Meanwhile, excise duty on cigarettes would be at least 147.7 euros per 1000 cigarettes, up from 138 euros now, making a pack of 20 cigarettes 0.21 euros more expensive next year.
Excise duties on heated tobacco and alternative products would rise by 11 percent, while excise duties on smoking and untreated tobacco would increase by 7.8 percent each. Excise duties on e-cigarette liquids would increase by 30 percent over the next three years.
If approved by the Seimas, the changes would enter into force on January 1, 2025.
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