EU wants smokers to pay more for cigarettes

16:29, 16 July 2008
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Smokers may be tempted to stock up on cheaper cigarettes from Ukraine?

Smokers in many European Union countries will have to pay more for cigarettes under plans from the bloc`s executive to raise minimum excise duties, according to Reuters.

Cigarette prices will rise nearly 47 percent in Poland and by 36 percent in Slovakia and Bulgaria under the plans, which have to be approved by all 27 EU governments to take effect.

Newer EU states would be hit hardest as duties there were far lower when they joined the bloc.

EU Tax Commissioner Laszlo Kovacs said the proposal would wean more people off tobacco and narrow huge differences in cigarette prices among countries.

"It will help reduce illicit trade and cross-border shopping, which undermine the revenue and the health objectives of member states which impose high taxes to deter smoking," Kovacs said.

In Britain, Ireland, Germany and France existing duties are already above the higher minimum level Kovacs is proposing so smokers would not have to dig deeper into their pockets.

Increases in the affected countries would be introduced gradually over five years to 2014.

The Confederation of European Community Cigarette Manufacturers had no immediate comment.

A packet of 20 costs over 8 euros in Britain, compared with 1.55 euros in Poland and 2.40 euros in Spain.

Kovacs said countries such as Poland would probably be given more time to introduce the excise duty hike in full.

Consumption of cigarettes in the bloc fell 10 percent between 2002 and 2006, when excise duties rose by an average 33 percent.

"In order to trigger a similar decline in consumption over the coming five years, further increases in excise duties would be desirable," the Commission`s proposal said.

Cigarette prices would have to go up by a quarter to cut consumption by a further 10 percent, Kovacs said.

The current excise duty on cigarettes must account for at least 57 percent of the price and be at least 64 euros per 1,000 cigarettes.

Kovacs proposes raising this to 63 percent and the rate of 64 euros increased to 90 euros for all cigarettes from 2014.

Duties on roll-your-own tobacco will be raised even more to bring them in line with tax on cigarettes. This would mean an increase in the minimum rates for fine cut to 60 euros per kilo.

The proposal would also remove loopholes that allow some cigarettes of fine cut tobacco to be sold as cigards, cigarillos or pipe tobacco and therefore benefit from a lower tax rate.

Smokers may be tempted to stock up on cheaper cigarettes from non-EU states such as Serbia and Ukraine, but Kovacs promised tougher customs controls to crack down on illicit trade.

Reuters, Guardian

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