Drastic increase in tobacco excise duty. “This could have a shock effect on the market”
Excise duty on traditional cigarettes is to increase by 25% next year, and on e-cigarettes by as much as 75%, Minister of Finance Andrzej Domański recently announced. “This is a huge surprise, considering the scale of the increase. It may cause a shock effect on the market,” Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs, said in an interview for Wprost.pl.
Next year, excise duty on cigarettes is set to rise by 25%, on smoking tobacco by 38%, and on tobacco heater inserts by as much as 50%. The largest increase will affect e-cigarette liquids, in which case excise duty will rise by as much as 75%. Let us recall that according to the road map adopted by the previous government, the tax rate on tobacco products was to rise by 10% annually until 2027.
– This is a very big surprise. We were convinced that since it is July, then according to a number of promises made, for example in the coalition agreement, the vacatio legis period for changes to tax regulations was to be at least six months. This principle has been violated – said Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs, in an interview with Wprost.pl.
The government is looking for money?
Many experts point out that such an unexpected decision to increase may be the result of desperate attempts to find budget revenues. On Friday, Poland, along with six other European Union countries, was included in the excessive deficit procedure.
– This fiscal context is probably present. Of course, in official statements, these changes are motivated by concern for the health of Poles, so that they consume fewer tobacco products that are harmful to health. But in this context, it is surprising that products such as electronic cigarettes or innovative products are covered by a greater increase in excise duty than more harmful traditional cigarettes – says Łukasz Kozłowski.
Gray area
The expert also fears that the sharp increase in excise duty will lead to an increase in the so-called grey zone, i.e. cigarettes originating from smuggled or illegal production in the country.
– According to the latest research results, the grey zone is between 4.5 and 5 percent of the market. This is a great success, because it is worth remembering that 9 years ago it was 20 percent. We created such a large grey zone at that time, among other things, by dramatically increasing the excise tax – said Kozłowski.
