Latvian government endorses restrictions on tobacco products importations
Published on October 5, 2009 10:09 AM
Last week, Seim, the government of Latvia approved in the second reading an amendment to the legislation concerning the cigarette excise taxes. Starting from Oct 1st, the amount of cigarette products brought into the country by individuals from countries outside of European Union will be restricted and dramatically reduced comparing to the current maximum possible amount.
In addition, in conformity with the new law, individuals will be able to bring the permitted volume of cigarettes or other tobacco products from the non-EU member countries only one time every day.
According to the current legislations, individuals coming to Latvia from the outside of the EU can take with them up to one carton of cigarettes, 10 packs of cigarillos, 5 packs of cigars and 250 g of loose tobacco. When the latest amendment passed last week enters into effect, the permitted maximum amount is reduced to four packs of cigarettes, 2 packs of cigarillos, 1 pack of cigars and 100g of loose tobacco.
The legislation covers the tobacco products imported to the country by individuals for their personal consumption only, without any further distribution.
Latvian Revenue and Fiscal Agency reported that approximately 50 percent brought in to the country each year by individuals from neighboring Belarus and Russia and alleged to be intended for personal use, is in fact vended on the black market, therefore the state budget looses tax revenues, since nobody pays bootleg products. According to the agency, annual state budget falls short of almost LVL 4.1 million ($8.5 million) in lost cigarette excise taxes.
During the press-conference Latvian Finance Minister, Einars Repse mentioned that the legislation will cover only individuals bringing tobacco products from the countries outside of EU, and the amendments will not be spread to business owners as they are already struggling with hefty excise taxes and economic downturn.
As a result of the restriction of the volume of contraband cigarettes selling on the black market, officials anticipate the growth in sales of legal tobacco products, which could lead to generating nearly LVL 3 million ($6 million) for the budget in tax revenues.
As it was reported many times, Latvian Ministry of Finance was not satisfied with the amount of profits generated by increasing excise taxes on tobacco products.
Finance minister declared that the corresponding measures to crack down the smuggling of tobacco products into the country should have been implemented long time ago. He said there are criminals who earned millions by employing people to bring maximum allowed amount of tobacco products to Latvia.
Mr. Repse also mentioned that State Revenue and Fiscal Agency failed to track the smugglers and crack down this illegal activity, so the government had to take measures to prevent the loss of revenues for the severely cash-strapped state.
In addition, Latvian lawmakers, reportedly, began the consideration of the comprehensive ban on smoking in public places, as the country is eager to get equal with the majority of developed nations, like France, Germany, and the United Kingdom who have already implemented corresponding legislation.
