REUTERS
In particular, the bill provides for an increase in the excise tax on cigarettes.
Director for Corporate Affairs at Philip Morris Ukraine Nataliya Bondarenko says if bill No. 1210, which increases the excise tax on cigarettes, is passed by Ukraine's parliament, the illicit tobacco market may reach 27 billion cigarettes, or about 59% of the legal market, while legal producers may see a drastic decline in sales and the state will fall short of planned excise tax revenue.
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Philip Morris Ukraine has expressed serious concern about the provisions of bill No. 1210 and the plans to increase excise taxes on cigarettes. The company assured that if the government so suddenly, without discussing with businesses, takes initiatives that could make the legal market shrink, it would be forced to review the operation of its Ukrainian-based facilities. In particular, the bill provides for an increase in the excise tax on cigarettes, which will lead to an increase in prices by 2.5-3 times, up to UAH 80-100 (US$3.21-4.02) per pack of cigarettes.
"We have already seen the consequences of the policy of a 30%-40% increase in excise tax rates over the past four years. The illicit tobacco market has expanded seven times over the period. We believe that an increase in excise tax rates by 150% will not allow us to keep the legal market at the current level," Bondarenko told 112.ua on October 23.
As was earlier reported, British American Tobacco (BAT), one of Ukraine's major taxpayers, shut down its factory in Ukraine due to ill-considered tax initiatives by the Ukrainian government. The factory's work was suspended for an indefinite period of time. Employees, despite the business interruption, still receive wages, but it is for the time being, according to a source of 112.ua.