Ukraine - President Yushchenko vetoes bill to hike tobacco products tax..

November 20, 2009 - Ukrainian President Victor Yushchenko, citing concern for the tobacco industry and fears of cigarette smuggling, on November 11 vetoed legislation that would have hiked the excise tax on tobacco products by 36 percent.

“The government has decided to raise taxes on virtually everything - alcohol, cars, gas and land in the face of a financial crisis. But cigarettes seem to be omitted on purpose,” said Hanna Hopko (from the Washington, D.C.-based non-profit organization, Campaign for Tobacco-Free Kids), referring to the latest economic plan drafted by Finance Minister Victor Pynzenyk. Based on World Health Organization (WHO) research, higher cigarette prices are the most effective way to get adults to quit smoking and to prevent children from starting. "Raising excise taxes will result in smuggling from Russia, Belarus and Moldova,” Pynzenyk said. “Money from cigarette sales will go to these countries.”

Public health advocates called a news conference on November 12 to criticize Yushchenko and note that price increases are the most effective way to reduce smoking. Roughly a third of Ukraine’s adults smoke, one of the highest rates in the world. According to the WHO, more than 100,000 Ukrainians die of diseases caused by smoking annually. Tobacco-related illnesses prematurely kill some 300 Ukrainians daily, said former Health Minister Mykola Polischuk. “The president’s veto contradicts his mottos about European integration,” Polishchuk said. “Today all Europe is fighting for air uncontaminated with tobacco smoke.”

In contrast to the president’s fears that cigarettes will be smuggled into Ukraine if taxes are hiked, the flow of cheap contraband cigarettes goes the other way – from Ukraine, where cigarettes prices are the lowest in Europe, to other nations. The national customs service reported no cases of imported tobacco contraband in the last year, while 1, 700 cases -- involving 2.1 million packs - of export contraband were registered. In fact, Ukraine – with its cigarette factories pumping out billions of more cigarettes a year than are smoked domestically – is a prime source of cheap cigarettes smuggled abroad. (Ukraine - lost cigarettes flooding Europe..)

“Ukraine has the lowest taxes on cigarettes in the world, three to four times less than other countries,” Prime Minister Yulia Tymoshenko said.

Ukraine is NOT a member of the European Union (EU). The EU is seeking an increasingly close relationship with Ukraine, going beyond co-operation, to gradual economic integration and a deepening of political co-operation.

Reference:
Tobacco tax veto criticized, Nataliya Bugayova, KyivPost.com, 11/12/2009; A high-ranking smoker keeps cigarette prices low in nation, Yuliya Popova, 10/29/2009; New High For Underage Drinking And Smoking, Kiev Ukraine News Blog, 1/10/2008.

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