Bundle – 36 UAH: the Cabinet has prepared a new plan to raise the excise tax on cigarettes

Пачка – за 36 гривен: Кабмин подготовил новый план повышения акцизов на сигареты

The government of Ukraine has prepared a new plan of raising excise taxes on tobacco from January 2019, the average price of a pack of cigarettes will be about 36 USD.

This was reported by Ukrainian centre for tobacco control NGO “Life”.

“The government offers to raise excise on cigarettes by 30.8% from 1 January 2019. A proposal was submitted by the Cabinet of Ministers the draft law No. 9085 dated 17 September,” the organization reports.

According to the document, for cigarettes the minimum excise tax will increase from 773,2 hryvnia per 1,000 in 2018 to 1011,35 UAH in 2019. The minimum excise tax on a pack of 20 cigarettes in 2019 will be of 20.23 UAH UAH was 4.76 higher than in 2018. VAT and retail (5%) of the excise tax burden on a pack of cigarettes will increase by 5.79 UAH.

“In accordance with the terms of tobacco taxes until 2024, the rate of excise duty from 1 January 2019 would increase by 20%, however, the Cabinet also used the legislative tool of inflation in addition to the projected increase in excise taxes. According to the State statistics service, in August 2018, the consumer price index to the corresponding month of the previous year (i.e. last 12 months) amounted to 9.0%, so the rates on excisable goods is proposed to increase further to 9.0%. That is, according to the calculations (1,20 * 1,09 = 1,308) the excise tax on cigarettes plan to increase by 30.8% “, – stated in the message of the organization.

The minimum excise tax will be paid on all cigarettes, which in 2019 will be in stores the price that is lower than 45 UAH for a pack, that is, the most of cigarettes in Ukraine.

In August 2018, according to the state statistics service, the average price of a pack of cigarettes was 30.3 hryvnia. In the organization calculated that if the price of cigarettes will increase by only the amount of the increase of the tax burden, then in 2019 the average price of a pack of cigarettes will be about 36 USD.

OO “Life” notes that, according to European commitments, Ukraine should increase the rate of excise tax on cigarettes to 90 euros per 1000 pieces up to 2025 and to ensure that excise duty was not less than 60% of the price of cigarettes. Now the minimum rate of excise duty equal 773,2 hryvnia (23,8 Euro) 1,000.

So, according to the Treasury in July 2018, the State budget received from tobacco excise taxes more than 4.5 billion hryvnia, which is almost 1 billion UAH more than in July 2017. It is noted that for the first time in the history of Ukraine monthly revenues from tobacco excise taxes has exceeded 4 billion.

“In 2008 and 2017, the average rate of the excise tax on a pack of cigarettes in Ukraine increased more than 20 times, allowing revenues to the state Budget rose from 3.5 billion to almost 40 billion in 2017. At the same time, the first half of 2018, the cigarette market in Ukraine decreased by 10%”, – cites the NGO “Life”.

Recall that on 5 September the Cabinet of Ministers proposed the Verkhovna Rada to establish the amount of excise tax for cigarettes at ad valorem and specific rates at a level not less than the minimum excise tax liability, until 31 December 2024.

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