Estonia continues to perform poorly across every category of the Nanny State Index except food and soft drinks. The government suspended its tax on e-cigarette fluid in 2021 as a result of cross-border activity and illicit sales, but reinstated it (at €0.20 per ml) at the start of 2023. It has since risen to €0.22 and is due to rise again in July 2025.

Between 2016 and 2018, Estonia’s spirits duty rose by 30 per cent, wine duty rose by 50 per cent and beer duty doubled. This led to a textbook illustration of the Laffer Curve as Estonians travelled to neighbouring Latvia for their alcohol shopping and Finns - who have long made the trip to Estonia for theirs - went elsewhere. The government expected alcohol revenues to rise from €251 million in 2016 to €276 million in 2017. In fact, the tax rise caused revenues to fall to €229 million in 2017 and by 2018 they were 30 per cent lower than expected. It was a sobering experience for the Estonian government which abandoned its plans to introduce further tax hikes on alcohol in 2019 and 2020. Taxes on beer remain high, however, and taxes on alcohol overall are the 9th highest in the Nanny State Index, after adjusting for income.

Estonia’s Tobacco Act views e-cigarettes as ‘products used similarly to tobacco products’ and includes them in the smoking ban. E-cigarette flavours were banned in June 2019, with the exception of tobacco flavour. Estonia’s smoking restrictions are less severe than in most EU countries, but a ban on smoking in cars with children was introduced in 2016 (with maximum fines of €300) and a ban on smoking in prisons came into effect in October 2017. There is a full ban on tobacco advertising, and cigarettes cannot be sold from vending machines. A tobacco display ban came into effect in July 2019.

Estonia’s Advertising Act, introduced in January 2018, bans all outdoor advertising for alcohol, and the watershed for TV and radio advertising was pushed back to 10pm. What little alcohol advertising remains can only provide minimal, factual information about the product. Happy hours and alcohol tastings in shops are banned. Shops must display their alcoholic drinks away from the rest of their groceries and cannot be visible from the street. Happy hour discounts are illegal.

With thanks to the Centre for Free Economic Thought