European Union - agrees to raise the minimum tax on tobacco products sold in the region..

November 11, 2009 - The European Union has voted to raise the minimum tax on tobacco products sold in the region, saying it would help protect public health and boost government revenue. The new taxes will go into effect in 2014. Countries in the EU which do not currently tax tobacco at the minimum rate, or have only recently raised rates to this level, will have until 2018 to comply with the new tax level.

This tax rise will start in 2014 for most of the 27 countries of the Union, while some others as Estonia, Latvia, Lithuania, Poland, Greece, Hungary, Bulgaria and Romania will be allowed to delay the measure until 2018, as prices in this countries are lower than in the rest of the EU (from 1 euro per pack in Latvia to 6 euro in Ireland) and this raise would risk to have a too complicated impact in the market.

The tax on cigarettes will be expanded by 30%, from 64 to 90 euro ($134.9) per 1000 cigarettes. Under the new rules, the minimum tax will be raised to E90 for every 1,000 cigarettes, and no lower than 60% of their sales price; up from E64 ($96) per 1,000 and no lower than 57% of the sales price.

Some industry experts have asserted that the measure will increase smuggling from countries outside the EU such as Russia, Ukraine or African countries, where mafias are involved.

Figures from 2006 showed that about 25% of the EU's near 500 million people smoke and the number is declining steadily. According to British statistics, smoking kills more than a million men and 200,000 women in the European Union each year.

Related news brief: European Union - finance ministers will meet to agree on a minimum tax on tobacco and to eliminate loopholes..

References: EU Confirms Rise In Cigarette Tax, KAMCITY.com, 11/11/2009; EU Against Cigarettes: First Round, Published by David Hernandez Garcia, EstonianFreePress.com, 11/11/2009; UPDATE: EU Countries Reach Deal On Tobacco Tax by Adam Cohen and Joe Parkinson Of DOW JONES NEWSWIRES, The Wall Street Journal, 11/10/2009; EU agree to boost tax on cigarettes, European Union News - Reuters, 11/11/2009.