Category: Taxation

  • Bulgaria to Raise Excise Taxes

    Bulgaria to Raise Excise Taxes

    Photo: Rodworks

    Bulgaria will increase excise taxes on tobacco products in 2025, reports Novinite.

    The finance ministry has proposed to fast-track the increases originally set for 2025 and 2026. Specifically, the excise tax on cigarettes will rise from LEV194 ($104.09) for 1,000 cigarettes to LEV211, which will likely increase the cost of a pack by LEV0.7 to LEV0.8.

    The excise duty on smoking tobacco will also increase, rising from LEV184 per kilogram to LEV0222, while the tax on heated tobacco will jump from LEV331 to LEV400 per kilogram. The excise tax will also rise for other smoking products, including those with or without nicotine, such as herbal mixtures. The ministry expects that these accelerated increases will generate over LEV230 leva in revenue in 2025.

    Despite these planned increases, the Ministry of Finance asserts that the rise in excise duties will not hinder the country’s goal of maintaining 2 percent inflation as part of its preparations for joining the eurozone.

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  • French Senate Approves Tobacco Tax Hikes

    French Senate Approves Tobacco Tax Hikes

    Photo: Richard-Villalon

    The French senate approved tax hikes on tobacco products, reports The Connexion.

    With the measure, lawmakers want to raise funds for France’s social security budget, which faces a deficit of €16 billion next year, and reduce the strain on healthcare services by discouraging smoking.

    The tax increases will see the average price of a packet of cigarettes increase to €12.70 in 2025, €0.40 more than envisaged in an anti-tobacco plan outlined by the previous government last year.

    The measure is expected to raise around €200 million per year. The government wants a pack of cigarettes to cost  €13 by 2027.

    Lawmakers are also considering tax increases for nicotine pouches, nicotine sachets and oral gum/beads, although the health minister is looking to ban some of these products.

    The increased taxes should be in place until the products are banned.

  • Finland to Hike Tobacco Taxes

    Finland to Hike Tobacco Taxes

    Image: Schlierner

    Finland will increase tobacco taxes by nearly 30 percent between now and 2027, reports Yle News.

    The raises will take place in six increments and eventually drive the price of a pack of cigarettes above €13 ($14.16). Tobacco taxes will be raised twice a year until July 2027, for a total increase of 27.1 percent.

    The government aims to earn around €100 million from the tobacco tax increases.

    The tax increases will apply to cigarettes, loose tobacco, pipe tobacco, cigars and cigarillos. However, nicotine pouches and e-cigarette liquids will not be affected by these hikes.

     After the increases, a pack of cigarettes will cost an average of around €13.20.

  • Gibraltar Increases Cigarette Duty

    Gibraltar Increases Cigarette Duty

    Image: anetlanda

    The government of Gibraltar has increased the duty on cigarettes by GIP0.25 ($0.32) per pack, reports The Gibraltar Chronicle.

    Health authorities on the British Overseas Territory continue to voice concern about the high number of smokers in Gibraltar, which is about double the rate in the U.K.

    A lifestyle survey conducted on the Rock in 2021 showed that nearly one in four people on the peninsula smoke. The majority of smokers (51.9 percent) had started by the age of 16. Health advocates blame low tobacco prices.

    “The number of people that smoke in Gibraltar is definitely over 20 percent and it’s nearly twice the rates that they have in the U.K.,” Helen Carter, director of public health, told the Gibraltar Chronicle.

     “That’s not surprising taking into account how cheap cigarettes are here in Gibraltar.”

  • Choppy Waters

    Choppy Waters

    New taxes and regulations are reshaping the tobacco markets in the Baltic countries.

    By Vladislav Vorotnikov

    Following the Europe-wide trend, the Baltic countries are reshaping the tobacco market with new taxes and health regulations. These efforts promise dramatic changes to the industry, which is already experiencing shifts due to changes in consumer demand and demographic factors while dealing with the large-scale counterfeit problem.

    The Baltic region comprises three post-Soviet republics: Latvia, Lithuania and Estonia. Over the past decades, all three countries have been facing similar trends in tobacco consumption, including waning demand for cigarettes.

    “Within tobacco in the Baltic states, cigarettes are expected to continue struggling to maintain demand in 2024,” Bogdanas Poletajevas, senior analyst at Euromonitor International, told Tobacco Reporter.

    In 2023, around 1.9 billion cigarettes were consumed in Latvia, 2.47 billion in Lithuania and 1.29 billion in Estonia, KMPG said in a recent report.

    In recent years, cigarette consumption followed a steady downward trend, the company noted. For example, in 2020, cigarette consumption in Latvia stood at 2.1 billion, in Lithuania at 2.88 billion and in Estonia at around 1.5 billion.

    A steady depopulation process is one of the factors driving down cigarette consumption across the region. As of 2023, Latvia’s population was estimated at 1.8 million, Lithuania’s at 2.6 million and Estonia’s at 1.2 million. Compared with 2015, when the region boasted 6.2 million citizens, the number of residents dropped by nearly 20 percent.

    Several factors are in play, including weak demography and continuing emigration as a large number of young people seek job opportunities in Western European countries.

    In addition, the Baltic region is influenced by a general trend of cigarettes gradually losing their popularity in the developed countries.

    “Smoking prevalence in terms of cigarettes continues a worldwide trend of gradual decrease,” Poletajevas said. “This was underpinned by heightened health concerns as well as an increase in excise taxes and high inflationary pressure on energy and transportation costs, making cigarettes more expensive.”

    However, in the past few years, the cigarette market benefited from a surge in political tensions.

    In 2023, the share of smokers in Latvia slightly increased, LSM, a local news outlet, reported without providing concrete figures. To some extent, the tendency is attributed to rising stress and anxiety in the context of the Ukrainian conflict.

    “Increased stress levels can drive people to smoke. The geopolitical situation, problems at work, the political and economic situation in the country and possibly price increases [are among contributing factors]. During periods of increased stress, people start smoking to feel a sense of calm,” Agnese Ritene, president of the Association of Pharmacies of Latvia, told LSM.

    Indeed, opinion polls in the past couple of years indicate elevated anxiety levels among the citizens of Baltic countries, which border Russia and Belarus in the east.

    The rise in the number of smokers against this background is tangible. For example, in the age category between 15 and 24, the number of smokers spiked by 18 percent in the past two years, according to the Latvian Center for Disease Control and Prevention. 

    Transition in Progress

    However, market players also indicate that though the number of smokers in the region is on the rise, cigarettes are gradually losing ground to novel tobacco products.

    Poletajevas estimated that regular cigarettes continued to lose retail volume share to perceived less harmful alternatives like e-cigarettes and heated-tobacco products.

    “This trend raises questions about whether the overall popularity of smoking is genuinely decreasing or if consumers are merely transitioning to different forms of tobacco consumption,” Poletajevas said.

    “We have noticed that people are smoking classic cigarettes less. The demand for alternatives to cigarettes, such as electronic cigarettes, heated tobacco and nicotine pouches, has increased,” Madara Apsalone, a spokesperson for Philip Morris Latvia, observed during a press conference in Riga.

    The number of e-cigarette smokers in Latvia jumped from 1 percent to 8 percent, Una Martinsone, a public health analyst with the Disease Control and Prevention Center, reported. The number of women who vape shot up from 1 percent in 2020 to nearly 13 percent in 2022, she added.

    Euromonitor International estimated that the Baltic region’s cigarette market is divided among three leading players: Philip Morris International, BAT and Japan Tobacco International.

    “While cumulatively they are losing volume in the cigarettes category, major investments are focused on alternative nicotine consumption categories like heated tobacco,” Poletajevas said.

    “The leading player in new categories remains Philip Morris as the pioneer; however, BAT has taken [a] more aggressive strategy pricing-wise, which helped to cannibalize [a] substantial part of the market. The latest entrant into the Baltic markets is JTI, albeit [the company] still holds a marginal share and will need time to consolidate,” Poletajevas said.

    On the European Frontline

    The Baltic region also suffers from an inflow of counterfeit cigarettes, primarily delivered by smugglers from Belarus.

    As estimated by KPMG, last year, 260 million cigarettes sold in Latvia were illegal compared to 430 million in Lithuania and 140 million in Estonia.

    Lithuania’s state budget lost nearly €75 million ($82.31 million) as a result of the illegal market, the analyst calculated. Nearly 89 percent of all counterfeit cigarettes to the country were delivered from Belarus.

    In Estonia, the budget losses were nearly €30 million, with 57 percent of the illicit volumes coming from Belarus, the KPMG office noted. Latvia, in turn, lost €43 million, with 61.5 percent of smuggling also coming from Belarus.

    According to PMI’s Apsalone, although the volume of cigarette smuggling in Latvia has decreased in recent years, it still significantly exceeds the EU average. “Smuggled cigarettes in Latvia are still mainly imported from Belarus, even though the border with it is tightly controlled after the start of Russia’s war against Ukraine,” Apsalone indicated.

    Occasional reports indicate that some cigarettes smuggled to the Baltic region from Belarus end up in neighboring EU states, including Poland and Germany.

    KPMG analysts indicated that the general economic situation is tightly linked to the public’s tolerance of smuggling. When the population becomes wealthier, people grow reluctant to buy cigarettes, understanding that they are counterfeit or smuggled.

    However, this trend goes in both directions; when the economic situation deteriorates, illegal traders take advantage of that situation, KPMG indicated, citing the turbulence of the past few years when the energy crisis and rapid inflation took a heavy toll on the Baltic citizens’ purchasing power.

    Legal Initiatives Under Scrutiny

    The shadow segment of the cigarette market is a multifactorial phenomenon that requires the authorities to pursue a well-thought-out excise policy.

    “The legislative direction across all the Baltic states remains united,” Poletajevas said, adding that excise tax increase remains the main method of deterring tobacco consumption.

    However, he noted that regulations on new categories lag behind those for traditional tobacco products, hence offering cheaper alternatives to traditional products.

    This is expected to change in the coming years as plans are set for a steady excise increase for heated-tobacco and vapor categories in the region. Poletajevas said that further talks are being held among lawmakers on disposable vapor products and their risks for youth consumption and sustainability concerns.

    “Although loopholes may exist initially, tighter regulations are expected, potentially impacting the flexibility enjoyed by major players,” Poletajevas stated.

    Latvia is at the forefront of fighting against tobacco consumption in the Baltic region.

    Under a bill recently passed by Latvian Saimas, young people under 20 will be prohibited from smoking, buying or selling tobacco products from Jan. 1, 2025. These restrictions also apply to tobacco substitute products, herbal smoking products, electronic smoking devices and refillable containers for them.

    Other countries in the region also mull various restrictions on tobacco consumption.

    In Lithuania, lawmakers are considering a full ban on e-cigarettes. As explained by Antanas Matulas, chairman of the Parliamentary Committee on Health, earlier in 2024, the authorities are discouraged by persisting fraud on the market. She explained that some tastes and flavors were banned in the country as a part of the anti-smoking campaign, but the companies engaged in this segment refuse to obey. They repacked the banned liquids, put new labels and brought them back on the market, Matulas said.

    However, Matulas admitted that there would not be easy answers.

    The idea of banning e-cigarettes faces firm opposition in Lithuanian society as analysts warn that the move would give a powerful impetus for growth to the illegal segment and push a part of consumers back toward conventional tobacco products.

  • U.K. Announces Cigarette and Vape Tax Hikes

    U.K. Announces Cigarette and Vape Tax Hikes

    Image: John Gomez

    The U.K. government will increase tobacco duties by 2 percent above inflation for the remainder of the current parliamentary session and increase duty by a further 10 percent on roll-your-own tobacco this year, Finance Minister Rachel Reeves announced during the presentation of her budget plans on Oct. 30. From October 2026, the U.K. will also introduce a flat-rate duty on all vaping liquid alongside an additional one-off increase in tobacco duty to maintain the incentive to give up smoking, reports Reuters.

    Smokers’ rights activists warned that the plans would backfire.

    “Increasing the tax on tobacco above inflation will drive even more smokers to the black market, fueling illicit trade and hurting legitimate retailers,” said Simon Clark, director of FOREST, in a statement.

    “It discriminates against consumers from poorer backgrounds for whom smoking may be one of the few pleasures available to them.

    “Instead of punishing the low-paid, the government should focus on improving the environmental conditions that drive many people to smoke in the first place.”

    The U.K. Vaping Industry Association (UKVIA) described the planned duty on e-liquid as a penalty for smokers seeking to transition to less harmful nicotine products.

    “Whilst a flat-rate tax versus one graded on different nicotine strengths is favored so as not to deter smokers who rely on higher concentrations of nicotine when they start transitioning over to vapes, the additional cost of £2.64 (including VAT) per 10 ml of e-liquid is a kick in the teeth for former adult smokers who have switched to vaping to quit their habits. It will also be the highest rate in Europe,” said UKVIA Director General John Dunne in a statement.

    “Some 3 million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS [National Health Service] millions of pounds in treating patients with smoking-related conditions. This announcement today deters adult smokers from considering vapes as a method to give up their habits and hits the lowest-paid who go for more price-sensitive e-liquid options, which currently start at 99 pence and will rise to £3.83, representing a shocking rise of 267 percent.

    “For a government that places a great focus on the NHS, it is a nonsensical move to put a severe punitive tax level on vaping when the category has done so much to reduce the number of adult smokers requiring medical attention by being a driving force in the decline of smoking rates to record-low levels in recent years.”

  • Morocco Expects Surge in Tobacco Revenues

    Morocco Expects Surge in Tobacco Revenues

    Image: alexlmx

    The Moroccan government expects to collect more than MAD13.7 billion ($1.32 billion) in tax revenue from tobacco sales, reports Morocco World News, citing data from the 2025 finance bill.

    This year’s budget introduces measures to increase tax revenue aimed at supporting economic growth, including domestic taxes on alcohol, beer and tobacco consumption.

    The finance bill aims to increase the government’s total tax take by 14.49 percent to MAD657.8 billion, with significant additional contributions expected from smokers and alcohol drinkers.

    Ministers met Oct. 18 at the Royal Place in Rabat to discuss key elements of the 2025 finance bill. Among other goals, the legislation aims to strengthen social cohesion, boost “economic sovereignty” and ensure sustainable public finances.

  • UK Urged to Drop Proposed Vape Tax Hike

    UK Urged to Drop Proposed Vape Tax Hike

    Delon Human (Photo: Taco Tuinstra)

    A plan to hike the tax on vapes in the U.K. risks undermining the country’s efforts to reduce smoking rates and would increase smoking-related death and disease, according to tobacco harm reduction advocates.

    The U.K. chancellor is reportedly considering the tax increase in the state budget this month. But harm reduction specialists say any rise could drive people who smoke back to far more dangerous cigarettes.

    “Vapes are proven to be 95 percent less harmful than combustible cigarettes and are helping millions of people who smoke worldwide transition to a safer option,” says Delon Human, leader of Smoke Free Sweden.

    “Both Sweden and New Zealand have dramatically reduced their smoking rates in large part due to the availability and accessibility of alternative nicotine products like vapes. As a result, both countries are now on the verge of being declared smoke-free and are reaping the subsequent public health dividend.

    “Any policy that limits access to these alternatives—whether through taxation or other barriers—threatens to reverse such progress.”

    Sweden is poised to be the first country to become smoke-free as a result of its progressive policy approach, which includes lowering taxes on reduced-risk products while increasing taxes on more harmful cigarettes.

    Compared to the rest of the European Union, Sweden has 44 percent fewer smoking-related deaths, a 41 percent lower cancer rate and 38 percent fewer deaths attributable to any cancer, notes Smoke Free Sweden

    “At Smoke Free Sweden, we advocate for sensible regulations that protect adult access to safer alternatives while discouraging underage uptake,” Human said. “This includes restrictions on youth-oriented packaging and clear communication about the risks of nicotine.

    “However, excessive taxation of harm reduction products is a step in the wrong direction. Rather than penalizing vapers, governments should focus on creating an environment where adults have easy access to safer alternatives and are supported in their efforts to quit smoking.

    “We urge the U.K. government to reconsider this proposed tax increase and to look toward evidence-based policies that have been successful in Sweden and other progressive nations. The world now has the tools to create a healthier, smoke-free future. We must not sacrifice those tools, which are already helping millions of people quit smoking for good.”

  • Philippines to Miss Tobacco Tax Goal

    Philippines to Miss Tobacco Tax Goal

    Image: mraoraor

    The Philippines will miss its PHP362.2 billion ($6.32. billion) excise tax collection goal this year due to declining demand for tobacco products, reports Business World. Tobacco excise accounts for more than 40 percent of the country’s excise tax take, according to Jethro Sabariaga, assistant commissioner of the Bureau of Internal Revenue (BIR).

    Sabariaga noted that tobacco consumption has been steadily decreasing over the past decade “You don’t see a lot of people smoking cigarettes these days. Even visually, you can confirm the shift in market demand,” Sabariaga said, adding that the collection growth in other excisable articles will not be enough to offset the decline in tobacco excise.

    The public’s shift to vape products has also been affecting the bureau’s excise tax take, according to Sabariaga. A single vape product is equal to one cigarette pack in excise taxes, but vape products often take longer to consume, he said.

    “So, a cigarette smoker shifting to vape, who usually consumes 10 to 15 packs of cigarettes a month, will probably just buy one vape product for the month, or worse, one for two months,” Sabariaga was quoted as saying.

    The BIR has also faced challenges in collecting excise taxes due to the stubborn illicit trade in tobacco products.

    In the first half of 2024, the agency lost around PHP7.2 billion in potential revenue from seized tobacco and vape products.

  • Maldives to Raise Tobacco Import Duties

    Maldives to Raise Tobacco Import Duties

    Image: RODWORKS

    The Maldives will raise the import duty on tobacco products from MVR3 ($0.19) to MVR8 from November onward, reports The Edition.

    In a post on social media platform X, President Mohamed Muizzu announced several actions to discourage the use of tobacco products. In addition to raising import duties, the government will increase its ad valorem take from tobacco products by 50 percent and ban smoking in public places.

    Earlier this week, the president announced that a ban on the import, sale, distribution, advertising and use of vapes would take effect in November.