Price of cigarettes in Russia to jump 50% next year
The draft legislation is to be presented to the government on
June 20, Izvestia daily reports.
Excise duty on filter cigarettes will be raised to 820 roubles ($25) per thousand cigarettes from 550 roubles ($17). The hike will increase the retail price of cigarettes by 50% to an average $3 per pack, the paper calculates.
The excise tax on alcoholic beverages also will increase, the
paper reports. It will go up from 9% to 25% on spirits, 14%
on wine, and 4% on champagne.
The duties will be raised to equalize taxation of tobacco
products with other European countries, the paper reports.
The fight against smoking is the second reason for the increase. If the price is increased, children, adolescents and the poor will either smoke less or move to low-quality tobacco, the paper reports.
"The less tobacco is available to the public - the
better. About 30% of Russian school children smoke. The
harm of low quality tobacco is not much different from high
quality tobacco, but to smoke it is less enjoyable," Izvestia
quotes the country’s chief neurologist Eugene Brune.
The initiative may lead to a sharp increase in counterfeit
tobacco and unfair competition from Customs Union members, the
paper quotes experts.
“Tobacco companies will really have a hard time. An open
border with Kazakhstan and Belarus allows anyone who wants to
bring cheaper cigarettes into Russia legally” , the paper
quotes the executive director of the Tobacco Industry Development
Council Eduard Vorontsov.
Earlier this month the World Health Organisation suggested
Russia’s Ministry of Health push for an increase the excise duty
on tobacco products seven-fold by 2020, the media reported. If
this happens, the average price of a pack of cigarettes will rise
to 240 roubles ($8) from the current 60 roubles ($2), RIA Novosti
quotes the Ministry of Health representative. Under this scenario
Russia’s budget will receive up to $20 billion in taxes.
In the US, President Barack Obama has proposed to nearly double
federal excise taxes to $1.95 on each pack of cigarettes to
compensate for the recent drops in revenue paid to state
governments that back tobacco-settlement bonds, Reuters reports.
A proposed tax increase would boost an average pack price to
nearly $7 in the US, the agency calculates.