We are facing drastic price increases for cigarettes, tobacco and e-cigarettes. Excise duty will increase by up to 75 percent!

High increase in excise duty on tobacco and e-cigarettes

Next year, excise duty on cigarettes is set to increase by 25 percent, on smoking tobacco by 38 percent, and on tobacco heater inserts by as much as 50 percent. Additionally, a new change will be an increase in excise duty on e-cigarette liquids by 75 percent in 2025.

Representatives of the tobacco industry are warning that such large and uneven increases could destabilize the market and increase the grey zone. They claim that these changes threaten the legal sale of tobacco products, which will consequently harm both consumers and the state budget.

The increase in excise duty is expected to lead to a significant increase in prices – a pack of cigarettes is to become approximately PLN 3 more expensive, tobacco heater inserts by PLN 2, and 2 ml e-cigarettes by PLN 1.

Magdalena Szewczyk-Pochrzęst, director of the National Association of the Tobacco Industry, points out that these increases are a breach of the previous social contract, which assumed gradual increases in excise duty by 10% annually until 2027. Szewczyk-Pochrzęst emphasizes that these changes may have drastic consequences for the prices of tobacco products.

Impact on the market and consumers

According to experts, sudden and drastic increases in excise duty can seriously disrupt market balance and cause the growth of the grey zone. The Warsaw Enterprise Institute and the Business Centre Club criticize the decision of the Ministry of Finance, claiming that it is another example of the pathology of Polish economic legislation.

BCC excise tax expert Szymon Parulski points out that the Ministry of Finance has not presented an assessment of the impact of the regulations on the proposed solutions. Parulski adds that already in the second year of new increases, excise tax revenues may be lower than in the case of continuing the current excise tax map.

The future of the tobacco market

According to KSPT data, cumulative increases in excise duty on tobacco products in 2022-2027 are to amount to 109% for cigarettes, 165% for smoking tobacco, and 401% for tobacco heater inserts. In the case of e-cigarette liquids, excise duty will increase by 228%. Experts indicate that such increases may have far-reaching consequences, not only for the tobacco industry, but also for consumers and small and medium-sized enterprises.

Market representatives appeal to the Ministry of Finance to maintain the current solutions, which ensured stability and predictability. Magdalena Szewczyk-Pochrzęst notes that the excise map, despite initial doubts, worked very well, bringing stable revenues to the state budget and reducing the grey zone.