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Higher Excise Duties On Tobacco
October 16, 2014 09:55


Russia, being a member of the anti-smoking convention of the World Health Organization (WHO), may increase the excise duties on tobacco nearly twofold, which will raise the average price of a pack of cigarettes up to 216 roubles, as compared with the current price of 64 roubles.

The representatives of the 179 memebr countries of the WHO Framework Convention on Tobacco Control that gathered in Moscow yesterday almost unanimously supported the increase in the excise duties on tobacco. The delegates, including Russia, supported the WHO recommendation, according to which 70% of the price of a pack of cigarettes would be the excise duty (excluding VAT), according to the “Izvestia” newspaper.

The share of the excise duty in the price of a pack of cigarettes in Russia does not exceed 40% now. Russian budget has received about 200 billion roubles from the tobacco excise duties over 2013. Some countries, such as the UK, Bulgaria, Egypt, Cuba, Tunisia and Brunei, have increased the share of excise duty in the price of a pack up to 70%. With the growth of excise duties on the WHO recommendation the price of a pack of cigarettes in Russia may grow 3.3 times, including all taxes, as the representatives of the international tobacco corporations told to the edition. This means that the average retail price of a pack of cigarettes will reach 216 roubles.

However, some respondent manufacturers believe that such a scenario is impossible in Russia: according to them, the WHO recommendations are not binding even to the states that have signed the anti-tobacco convention. The representatives of tobacco companies have criticized the WHO initiative.

“Global standard guidelines of the WHO violate tax sovereignty. They are incorrect both from the tax point of view and from the point of view of health care, and are not supported by factual data” – the Vice-President of Corporate Affairs and Communications of the Russian JTI office Sergei Kiselev said.

The Director for Corporate Relations of “BAT Russia” (Department of British American Tobacco) Aleksandr Lyutyi noted that the sharp rise in prices at the same time while the income of the population remainsat the same level leads to the development of illegal market, as well as reduction in legal industry and decrease in tax revenues for the treasury. The Co-Chairman of the Russian anti-tobacco coalition Daria Khalturina, on the contrary, believes that the Ministry of Finance increases the excise duties on tobacco too slowly. 

Author: Anna Dorozhkina

Tags: Russian trade     

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