May 11th, 2009 12:12

Cigarette Price is High Everywhere, even in Ukraine

In a lot of countries, cigarettes price was raised. But starting with May 1st in Ukraine, where there are the cheapest-in-Europe cigarettes, tobacco products will be slightly more expensive.

For example, in Ukraine the minimum excise rate per pack of 20 non-filter cigarettes from Hr 0.50 to Hr 1, and of 20 filtered cigarettes from Hr 0.94 to Hr 2.

In Ukraine the tax on other tobacco products will grow from 16% to 20% of sales.

The new legislation also foresees an increase in specific excise duty (based on quantity, weight and volume) cigars from UAH 50 per kilogram to UAH 60 per 1,000, on non-filter cigarettes from UAH 15.60 to UAH 35 per 1,000, and on filtered cigarettes from UAH 37.50 to UAH 60 per 1,000.

The specific cut out duty on tobacco for smoking will grow from UAH 15.60 to UAH 35 per kilogram, and on chewing tobacco and snuff from UAH 6.25 to UAH 10 per kilogram.

The law also introduces a stricter norm for the indexing of specific excise duties and minimum excise taxes: if earlier the duties and taxes were adjusted according to set indices only if the annual inflation exceeded 10%, nowadays the indexing will be carried out in any case.

Market operators say that the new excise rates will translate into an increase in the price of cigarettes by UAH 1-2 per pack.

In fact, the minimum price per pack of non-filter cigarettes will be UAH 3 (now it is UAH 1.8 per pack), and that of filtered cigarettes will be UAH 4.25-4.3 (now it is UAH 2.75).

In February, the excise rates grew to UAH 15.6 per 1,000 non-filter cigarettes and to UAH 37.5 per 1,000 filtered cigarettes instead of previously effective UAH 12.5 per 1,000 and UAH 30 per 1,000 respectively.

Cigarettes, the largest sector in Ukraine, performed particularly well despite its maturity. This positive development was attributable to a number of factors. Most notably was, already high smoking rates in Ukraine which start to rise in 2007, while public tolerance of smoking in the country remained very high.