Russia Continues to Collect Significant Tobacco Taxes

Tax payments by the leading international cigarette manufacturers have provided the Russian government with at least $7.25 billion in additional income since President Vladimir Putin ordered his army to attack Ukraine, according to an analysis of Russian Treasury figures conducted by The Telegraph.

Center-Life, an anti-smoking lobbying group in Ukraine, told The Telegraph that 2020 taxes from PMI and JTI alone would fund 700 Mil Mi-24 helicopters, 1,970 T-72 tanks and 382 Sukhoi Su-25 fighter jets for the Russian army.

“It’s clearly completely wrong that these western firms continue to pay significant taxes into Russian coffers because so much of Russian state expenditure now is to fund the war in Ukraine, which is killing people in large numbers,” Bob Seely, a Member of Parliament on the Foreign Affairs Committee, was quoted as saying by The Telegraph.

Following the Feb. 24 invasion, international cigarette manufacturers announced they would end their operations in Russia, but retreating from such a major market is easier said than done. Tobacco companies have had to carefully navigate shifting regulations and avoid missteps that could prompt the government to seize the business, for example—all the while trying to protect employees from becoming targets for arrest.

Earlier this year, Philip Morris International CEO Jacek Olczak described the process as “bloody complex.” In a July interview, he said the company was unlikely to be able to leave Russia before the end of 2022.

Russia is the world’s fourth-largest cigarette market. Prior to the war, Japan Tobacco International led the market with a 36.7 percent share, followed by PMI (31.7 percent) and BAT (23.5 percent), according to Cowen & Co.