Smoker's tax, traders double the effect of changing the excise tax

The Albanian Government has chosen to increase the price of cigarettes in a bid to curb tobacco consumption in Albania.

Coming into effect on the 1st of January this year, the recently approved increase to the tobacco excise and the additionally applied VAT had consumers expecting to pay an extra 10 lek per packet of cigarettes in 2018.

However, traders have aggressively taken the opportunity to abuse the changes by increasing the costs of packets of cigarettes by a higher amount than the according calculations of the excise, doubling the price increase to 20 lek per pack.

The decision to increase the cigarette excise was a government decision with the intention to address concerning levels of tobacco consumption in Albania.

The World Health Organization places Albania amongst the highest in the world in regards to rates of tobacco consumption, placing significant pressure on the healthcare system.

The Health Ministry also expressed concerns about the significant danger smoking poses to the health of Albanians.

Albania has about 753 thousand smokers in total, out of which 651 thousand are male.

As an effect of increasing the level of excise, 5 lek per package can be calculated as an additional cost. According to calculations, the increase by 5 lek per package + the 20% VAT, adding also the growth of the minority market, the price reflected should be an increase of 10 lek per package.

However,currently consumers are forking out an extra 20 lek as a result of the change, which can only be attributed to the abusive actions of traders.

EU countries have managed to avoid the temptationfor abuse by traders by setting the price of the tobacco package on its fiscal stamp.

The method applied here in Albania leaves the door for market abuse both from importers and retailers.

Despite the government's claims that the increase is aimed at preserving the health of citizens, many believe that the real goal is to further stuff their pockets and line their coffers.

As a result of the increase in excise, the state budget is expected to receive more than 1 billion lek. This policy is foreseen to continue in Albania also in the coming years.

Unlike the countries of the region, Albania and Kosovo apply excise ononly quantity and not on the value of cigarettes, and the excise rate is smaller, with the exception of Macedonia.

EMISIONET