Since we had quite low price on alcohol in Estonia 2016 and before we had a lot of visitors from both Finland and Sweden. Finland pays double salary as Estonia, means taxes in Finland are alot higher. Parlament decided to rise tax in Estonia, nearly double it by the end of 2018.
Today alcohol prices have nearly doubled, they thought it was mathematically good idea but they were wrong. Estonians drive to Latvia for cheap alcohol so does the Finnish community. So far we have lost nearly 100m what parlament expected to gain so far.
More we screw up financial situation more curious i am why it happens so. Some time ago i read how Walmart got so big, they build their market centre of other markets they thought Walmart will bankrupt soon but it didnt. Walmart strategy was low price, lowest price around so people will choose Walmart over other shops. Lower profit but more items equals more profit.
Estonia would also be like walmart if they lower taxes so everyone could afford to buy more , since every official buy/sell have income tax country would benefit more from it than rising taxes. Rising taxes should only consider when we oversell (deficit) something for example county runs out of petrol. Estonians about 70% are against the tax rise but who cares eh ?!
Basics:
Lower tax = more money left = more can afford = more money movement = More tax income for country.
Am i wrong, if so correct me please,
Thanks.