Baltic finance ministers reject EC suggestion to raise tobacco..

September 17, 2008 - At a meeting held in Trakai, Lithuania the Lithuanian Finance Minister, Rimantas Sadzius, Latvian Finance Minister, Atis Slakters, and Estonian Finance Minister, Ivari Padar, declared that each country should decide excise tax levels of tobacco products independently. On July 16, 2008 the European Commission proposed a gradual increase through 2014 in taxes on cigarettes and other tobacco products to try to persuade tobacco users to quit.

Take Estonia - from June 1 the excise tax on tobacco products increased in Estonia by 43%, which will raise the price difference of cheap cigarettes with those sold in Russia to nearly six times. Estonia was the first among the Baltic States to raise the excise tax on tobacco to the minimum level required by the European Union and the State will earn 20 kroons (1.81USD) of excise tax on a pack of cigarettes. Thus far consumers paid the State 14.2 kroons (1.28USD) per pack of cigarettes and this means that the price surge will be nearly 41%. In Russia, however, the excise tax is equivalent to 1.53 (0.138USD) Estonian kroons per pack. (Russia shares a border with Estonia, a former member of the USSR.)

According to a survey carried out by British American Tobacco, the proportion of illegal cigarettes in Estonia forms 19% of the total market volume. In 1994, Canada reduced tobacco taxes in response to concerns about smuggling, causing the real price of cigarettes to fall by one-third. (Tobacco smuggling, Luk Joossens, globalink.org)

Reference: Baltic finance ministers imposed veto on EC suggestion to raise tobacco and fuel excises, The Baltic Course, 9/12/2008 and Difference in prices of cigarettes in Estonia and Russia grows to almost six times by Juhan Tere, Baltic Course, Tallinn, 7/2/2008.

Baltic States.

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