June will bring higher prices for cigarettes after the Ministry of Finance decided to increase the excise duty on tobacco by 1 percent, capital.ro informs.
Also, the officials of the institution negotiated with the big players in the tobacco industry a timetable to increase the excise duty with 2 percent per year by 2022, Ionut Misa, State Secretary of the Ministry of Finance announced.
For other tobacco products such as heat-not-burn cigarettes, fine tobacco for cigarettes, other smoking tobacco, the excise duty increases by 2 percent from January 1, 2018, and the increase will be maintained until 2022.
However, the excise structure remains the same, while the minimum excise duty is maintained at 97 percent of the total excise duty.
Cigarette manufacturers were not taken by surprise.
“An increase in total excise was expected, given that there was no inflation in 2016 and that the specific component fell from April 1. After publication in the Official Gazette, each producer will announce the new prices following the legal procedure,” Gilda Lazar, JTI Director Corporate Affairs for Romania, Moldova and Bulgaria, stated.
”We believe that the introduction of an excise calendar for the next 5 years is a measure that gives sustainability both to budgetary incomes from tobacco taxation and to the industry, the second most important for the state’s budget. This is why we value the fact that the Government’s decision involved consultations with the industry. British American Tobacco has stated that a clear excise calendar will ensure the growth and sustainability of budgetary incomes from taxation of legal trade without damaging the ongoing efforts to reduce illicit trafficking,” Gemma Webb, CEO at British American Tobacco (BAT) said in turn.
According to her, the Government’s initiative allows to project the state’s budgetary incomes for a reasonable period of time, while at the same time giving producers the stability that is necessary for their activity and for continuing investments in Romania.
She pointed out that, although taxes represent the main component of cigarette prices, tobacco companies need to consider other costs when setting their price policies.
“We would like to remind the fact that late transposal of the Directive has left producers with just 30 days for adapting production while also cutting in half the time left for cleaning the market of products compliant with the old legislation. The consequences of the late and so far incomplete transposition of the Tobacco Products Directive will also be felt in 2017,” Webb also added.