To­bacco tax hike to hurt state rev­enues

Kathimerini English - - Focus - ANESTIS DOKAS

The in­crease in the spe­cial con­sump­tion tax on to­bacco prod­ucts from Jan­uary 1 will en­tail a 100mil­lion-euro an­nual loss in state rev­enues, a re­port is­sued by the Foun­da­tion for Eco­nomic and In­dus­trial Re­search (IOBE) warned yes­ter­day.

Ac­cord­ing to the re­port, the tax hike will bol­ster to­bacco smug­gling un­less more ef­fec­tive mea­sures to re­duce it are im­ple­mented. It es­ti­mated that the il­le­gal trade will grow by more than 5 per­cent­age points, mean­ing that con­tra­band cig­a­rettes will ac­count for 30 per­cent of all cig­a­rette con­sump­tion.

IOBE be­lieves that the new rise in tax­a­tion will lead to a sig­nif­i­cant in­crease in re­tail prices (by 40 to 50 cents per pack of 20 cig­a­rettes and by 50 cents per pack of fine-cut to­bacco) and a ma­jor de­cline in the con­sump­tion of le­gal to­bacco prod­ucts, mean­ing the hike will not have the de­sired re­sult in the coun­try’s fis­cal fig­ures.

The Fi­nance Min­istry is in­creas­ing the spe­cial con­sump­tion tax on cig­a­rettes from 20 per­cent to 26 per­cent from Jan­uary, and on fine-cut to­bacco from 156.7 eu­ros per tax­able unit to 170 eu­ros. This in­crease is aimed at the col­lec­tion of 121.8 mil­lion eu­ros in ad­di­tional tax rev­enues on an an­nual ba­sis.

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