CWNews

EU calls for a tax hike on tobacco products



SECTION: Europa

The European Union wants the minimum duty on cigarettes to increase to reflect inflation, putting all states on an equal footing.

The EU plans giving member states greater flexibility in levying duties as part of efforts to reduce the number of smokers.

The proposal is part of the bloc's regular four-yearly update on the union's tobacco excise duties.

Consumption of cigarettes in the 27 nations fell by 10 percent between 2002 and 2006, while excise duties rose by an average of 33 percent.

A 25 percent price rise would be needed to achieve a 10 percent cut in demand according to the commission.

It also wants higher taxes on rolling tobacco to bring them in line with cigarettes, likewise cigars and cigarillos.



Also reporting on this is the German News Agency

 
Deutsche Presse Agentur.
The European Commission wants to increase and
harmonize taxes on cigarettes across the European Union in a bid to
cut smoking and reduce tobacco smuggling.
  
According to a proposal presented on Wednesday by the EU's
executive arm, the minimum percentage of excise duties applied on the
price of cigarettes should be gradually increased - from today's 57
per cent, to 63 per cent by 2014.
  
"Today's proposal supports the EU policy to reduce tobacco
consumption and narrow the differences in price levels of tobacco
products within the EU," said Laszlo Kovacs, the EU's commissioner
for taxation and customs union.
  
Raising the minimum tax level in all member states "will help
reduce illicit trade and cross-border shopping, which undermine the
revenue and the health objectives of member states which impose high
taxes to deter smoking," he added.
  
Cigarette prices currently vary widely across the 27-member bloc -
from an average of 0.06 cents per cigarette (or 1.20 euros for a
packet of 20) in Latvia to 0.40 cents (or 8.10 euros per packet) in
Britain.
  
Such price differences largely reflect the level of excise duty
applied by member states on tobacco products, and contribute to the
smuggling of cigarettes from low-priced countries in Eastern Europe
to high-priced countries in the West. The commission estimates that
up to 20 per cent of all cigarettes consumed in certain EU countries
come from other member states where they are cheaper.
  
The commission also hopes that the rise in taxation will help cut
tobacco consumption by 10 per cent within the next five years.
  
According to a World Bank report, a 10 per cent rise in the price
of tobacco in rich countries leads to a decrease in consumption of
about 4 per cent. Young people are particularly sensitive to price
rises, the report found.
  
The commission proposal, which must be approved unanimously by all
member states, also aims to reduce the difference in price between
ready-made cigarettes and hand-rolled tobacco. It also targets
tobacco products that benefit from lower taxes by being marketed as
cigars or cigarillos when in fact they are not.
  
A longer transitional period would be granted to those countries
which still enjoy a derogation from the current EU legislation. These
are: Poland, Hungary, Slovakia, Romania, Bulgaria, Lithuania, Estonia
and Latvia.