TY - JFULL AU - A. Strateičuks and V. Kaže and R. Škapars PY - 2012/5/ TI - Impact of Changes in Excise Tax Rate for Strong Alcohol on Consumption and State Revenues in Latvia T2 - International Journal of Economics and Management Engineering SP - 689 EP - 693 VL - 6 SN - 1307-6892 UR - https://publications.waset.org/pdf/11178 PU - World Academy of Science, Engineering and Technology NX - Open Science Index 64, 2012 N2 - State tax revenues in most countries started to decrease during the recession. Government of Latvia decided to compensate the decline by increasing rates of several taxes including excise tax on strong alcohol. The total increase in 2009 constituted 42% and the rate increased from 896€ to 1 266€ for 100l of absolute alcohol. Since then this has had a negative impact on consumption volumes and the split between legal and illegal market. The legal alcohol sales decreased by almost 50% (by volume), consequentially having negative effect on the State revenues from VAT and excise tax. Estimated results for 2010 are indicating 54 million € decrease in VAT, excise tax and other taxes versus 2008 (excise tax -19 million €, VAT -30 million €, other taxes -5 million €). The paper aims to analyze impact of the increase in excise tax on consumption patterns, State revenues and competitiveness of the local companies to draw up proposals for the state authorities regarding more effective tax policies. The analysis reveals a relationship between excise tax rate, illegal alcohol market and State revenues. The results can be used to improve excise tax system and effectiveness in Latvia. ER -