Cig­a­rette tax hikes hav­ing op­po­site ef­fect

Kathimerini English - - Focus - ILIAS BELLOS

Ev­ery year the Greek state misses out on tax rev­enues of at least 800 mil­lion eu­ros due to the tax hikes it has im­posed on cig­a­rettes. With the new in­creases sched­uled from 2017, it runs the risk of miss­ing out on even more much-needed cash, as the shock of the hikes is likely to lead to a mas­sive swing to­wards il­le­gal to­bacco prod­ucts.

From bud­get rev­enues of 3.9 bil­lion eu­ros in 2011 (3 bil­lion from the spe­cial con­sump­tion tax and 900 mil­lion from the value-added tax), state cof­fers cashed in on just 3.1 bil­lion last year (2.4 bil­lion from the spe­cial tax and 700 mil­lion from VAT), with pro­jec­tions for this year point­ing to an even bigger con­trac­tion.

The drop is not due to peo­ple giv­ing up smok­ing, how­ever, as the mar­ket share of il­le­gal to­bacco prod­ucts has dou­bled from 10.1 per­cent in 2011 to 20 per­cent this year, and is ex­pected to grow to 25 per­cent in 2017 af­ter the upcoming rise in to­bacco tax.

The in­crease in re­tail prices is an­tic­i­pated to come to 40-50 cents per pack as a re­sult of the in­crease of the taxes’ share of the av­er­age re­tail price to 90 per­cent, which is by far the high­est in the Euro­pean Union, mak­ing the Greek to­bacco tax pol­icy an ex­am­ple to avoid in the fu­ture.

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