Influence of Changes in Excise Duty Rate for Strong Alcoholic beverages on Intake and Point out Revenues in Latvia

 Impact of Changes in Bar Tax Price for Good Alcohol upon Consumption and State Revenues in Latvia Essay

World Academy of Science, Executive and Technology 64 2012

Impact of Changes in Excise Tax Level for

Strong Alcohol in Consumption and State

Earnings in Latvia

A. Strateičuks, V. Kaže, R. Škapars

Abstract—State tax revenues in most countries begun to

decrease during the recession. Govt of Latvia decided to pay the fall by elevating rates of several fees including excise tax on strong liquor. The total embrace 2009 constituted 42% as well as the rate improved from 896€ to 1 266€ for 100l of overall alcohol. Since that time this has a new negative effect on consumption quantities and the divided between legal and illegitimate market. The legal alcoholic beverages sales lowered by nearly 50% (by volume), consequentially having bad effect on the State revenues by VAT and excise taxes. Estimated effects for 2010 happen to be indicating 54 million € decrease in VALUE-ADDED TAX, excise duty and other fees versus 2008 (excise duty -19 , 000, 000 €, VAT -30 mil €, additional taxes -5 million €). The paper aims to analyze impact of the increase in bar tax upon consumption patterns, State earnings and competitiveness of the local companies to draw up proposals for the state of hawaii authorities concerning more effective taxes policies. The analysis discloses a relationship between excise tax charge, illegal liquor market and State income. The results can be used to increase excise duty system and effectiveness in Latvia.

Keywords—State revenues,

competition, consumption.

liquor

market,

excise

S. Cnossen has shown that harmful liquor use is an extremely

important health insurance and safety a significant the EU and suggested that income from excise tax ought to be as high as damage from the

harm caused by the alcohol [6].

The paper should analyze effects of the embrace excise

tax on consumption patterns, Express revenues and

competitiveness from the local firms to set up proposals

pertaining to the state regulators for more powerful tax coverage.

II. ALCOHOL MARKET AND CONSUMERS IN LATVIA

Alcohol-based drinks represent a complex market

seen as:

1 . heavy impact of economic downturn with anticipated

restoration only beginning within number of years (see Stand 1);

2 . high impact of shoppers on marketplace development which will

is normal for fast moving consumer goods (FMCG)

market with substantial turnover rate, hence the market is very

competitive and new product propositions happen to be developed

and launched quickly following the within demand

– as any FMCG market, buyer loyalty is quite low;

a few. strong alcohol-based drinks are unique from other types of beverages due to relatively much higher importance of brand

characteristics and category specific ingestion patterns [7].

Category and company propensity is usually remarkably influenced

by consumer-related factors such as need declares, lifestyles

and even sensory preferences [8]. On other hand – good

spirits will be more vulnerable to faking than certain

light ones (e. g. wine) as a result posing a risk to legal marketplace

volumes and consequentially – state duty revenues.

tax,

I. INTRO

S

CIENTISTS who performing researches inside the alcohol field

mostly give attention to alcohol abuse and its particular problems just like

death rates, alcoholism, health and social costs of liquor. Latest data from Universe Health Firm (WHO) shows

that dangerous use of alcoholic beverages takes 2 . 5 , 000, 000 lives annually, 320 thousands of them are teenagers (15-29) resulting in

9% of all deaths in this age group [1]. Elizabeth Brainerd and David Meters. Cutler within their research " Autopsy with an Empire:

Understanding Mortality in Russia as well as the Former Soviet

Union” found increase in drinking as one of the main reason of embrace mortality and decrease in life

expectancy (-6. 6 years in the five years period from 1989 to

1994). Their quotes showed that about a quarter of the

embrace mortality (1. 7 years) was the consequence of increase in alcohol use [2]. Similar results were obtained also by simply P.

Walberg, M. McKee and Sixth is v. Shkolnikov during working hours " Economic...

References: Newspaper No . 1472, 2005.

Volume. 317, 98, pp. 312 – 318.

P. Anderson, B. Baumberg. " Hazardous drinking”, European commission,

DG Health and Customer Protection, 2007.

working paper No . 1821, 2006.

Record of Client Marketing, Volume. 28 No . 1, 2011, pp. 5-18.

(12. 01. 2011).

twelve. 12. 2008).

Development, Vol. 18, Not any 7, 1990, pp. 989-1002.

" Alcohol consumption report for Latvia (2010)”, Association of alcohol

manufacturers and marketers (ARTA), 2011.

" Alcoholic beverages market in Latvia (2010)”, Association of Latvian alcoholic beverages

producers and distributors, 2011.

Nielsen, " Report upon alcohol consumption in Latvia (2007, 2008, 2009,

2010)”, 2011.

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