Cigarettes and Tobacco News

Aug 28, 2006 -- Prague, Aug 29 (CTK) - Prices of cigarettes will probably grow significantly next year as on Wednesday, the government has on the agenda of its meeting the biggest increase in tobacco prices for the last few years, daily Mlada fronta Dnes (MfD) writes today.

If the higher excise duty on cigarettes is approved, the price of cigarettes will rise by up to CZK 16 a pack, the daily says.

At the end of next year, cigarette prices may be some CZK 20 higher than now. Taxes on cigarettes grew this year in April already but smokers have not yet seen the difference because producers usually pre-stock themselves with old stamps for the goods. When they run out of these stamps, prices will rise first by some CZK 6 and then by another CZK 16, MfD adds.

The tax rate is to be raised first by CZK 0.80 to CZK 1.75 per cigarette which can result in a CZK 16 price increase per pack. The concrete price growth depends on the producers who are trying not to lose clients when fixing the prices. The tax will also be raised for cigars and flake tobacco.

Another price increase will have to come as of January 1, 2008 as the EU fixes the bottom level on excise duties on cigarettes for its members.

Ministers say that they are only doing to what the Czech Republic has pledged in Brussels. However, they are glad to have the money to fill the holes in the state budget, MfD says.

The Finance Ministry reckons with CZK 10 billion from the higher tax on cigarettes next year. It remains to be seen whether in the current political situation they will manage to get the relevant legislation through.