Estonia-Latvia: Border Controls Halt Alcohol Tourism
The reintroduction of border controls between Estonia and Latvia due to the COVID-19 pandemic has halted alcohol tourism.
After border controls were introduced to reduce the spread of the coronavirus, the number of Estonians crossing the border to neighboring Latvia to purchase alcohol has declined significantly. This has led to alcohol border shops in Latvia reducing their opening hours or closing down. For example, Co Alco SIA has closed down their Goalco store in Ainaz, and Aldar Latvia, Superalko, Alko 1000 have all reduced their trading hours.
Cross border alcohol trade is a serious issue for the close knit Baltics region. Citing this as a reason last year, Estonia slashed their alcohol taxes by a 25%, in response Latvia stopped their original plan for a 30% tax increase and went for only a 5% hike instead. This meant alcohol was still cheaper in Latvia than in Estonia and showed that a tax war to the bottom is not an effective way to deal with the cross-border trade issue.
The re-introduced border control in Estonia shows that stronger implementation of laws can actually effectively control cross-border trade.
Due to the reintroduction of border control, only Estonian citizens and residents of Estonia with a residence permit or right of residence may enter Estonia. Foreign citizens whose family member live in Estonia can also enter. Anyone who enters the country must be quarantined for 14 days.
Slashing taxes will only result in cheaper alcohol leading to increased consumption and more alcohol harm. In close-knit regions, the weakening of alcohol control in one country has a ripple effect across the region.