Latvia to Gradually Raise Excise Tax on E-Cigarettes as Revised Bill Wins Government Support

Starting in 2024, excise taxes on e-cigarettes, e-liquid, cigarettes, alcohol, and alternative tobacco products will be gradually increased. The revised bill won government support on Monday.

According to a rapid report from Latvian News on October 9, Latvia will gradually raise excise taxes on e-cigarettes, cigarettes, alcohol, and alternative tobacco products starting in 2024. The revised bill received government backing on October 9. 

Latvia’s Ministry of Finance said the move is intended to increase state budget revenue and ensure the normal operation and development of the government, including additional funding for healthcare, internal and external security, and the education system. The ministry emphasized that the excise tax on cigarettes, e-cigarettes, and alternative tobacco products is primarily aimed at protecting public health, while also securing state budget revenue, and does not affect the free circulation of these goods within the EU market. 

Starting March 1, 2024, a three-year phase of excise tax increases will begin. Excise duties on e-cigarettes, cigarettes, cigars, and interchangeable products will be gradually raised, while narrowing the retail price differences between them. In 2025 and 2026, excise taxes on the above products will be adjusted on January 1 of each year. 

The excise tax on e-cigarettes and their components is planned to increase by an average of 21% per year. By 2026, the excise tax on e-liquid will reach €0.35 per milliliter. 

The excise tax on cigarettes will increase by an average of 5.6% per year, which will raise the price of each pack by about €0.14-€0.20. At present, the excise tax on cigarette tobacco is about €0.14 per gram. The rate is €0.02 per gram for smoking tobacco, €0.09 for tobacco and tobacco leaves, and about €0.22 for heated tobacco products.

The excise tax on tobacco and tobacco leaves is planned to increase by 10% annually. By 2026, the excise duty on 1,000 grams of tobacco will reach €122.3, and the duty per gram of tobacco will be €0.12. Currently, the excise duty on tobacco is 67% of the minimum excise duty on cigarettes, and this ratio will remain unchanged in the later stages of the tax increase plan.