Hungary Raises Cigarette Taxes

Following a ruling by the Court of Justice of the European Union (CJEU), Hungary has raised the excise tax on tobacco to historic heights, reports Hungary Today.

In March, the CJEU said Hungary had failed to comply with European Union regulations by keeping the excise tax on tobacco products below the required threshold.

Under EU guidelines, the excise tax on tobacco products must reach 60 percent of the average retail price and at least €90 ($107) per 1,000 cigarettes. The 60 percent ratio does not apply to prices above €115 per 1,000 cigarettes.

While the EU argued that Hungary’s lower tax rate distorted competition within the bloc and violated EU health protection regulations, the government said it wanted a gradual hike and a “fairer system”—one that takes into consideration the differences between member states’ tax systems and their populations’ varied income levels. 

In the Hungarian government’s view, the EU regulations also neglect the fact that countries on the union’s eastern borders face steeper competition from cigarette smugglers and black market imports.

Following a tax hike of 7.3 percent on Jan. 1, an additional 4.8 percent hike took effect on April 1 in Hungary.

Critics say the recent price increases put cigarettes out of reach for many smokers.

Following the most recent increase, a pack of cigarettes costs HUF1,700–1,800 ($5.62–$5.95), approximately HUF200–250 more than at the end of last year. This means that someone who smokes one pack per day will spend roughly HUF51,000–55,000 per month for cigarettes, which amounts to about half of the current net minimum wage.

In a recent poll, 23 percent of Hungarian smokers said they would quit because of price hike; 10 percent said they would switch to roll-your-own tobacco; and 8 percent would switch to vaping products. Twenty-two percent insisted they would keep smoking.

There are roughly 2.5 million smokers in Hungary, nearly one-third of the adult population.