Budapest (MTI) – A proposed one-off tax on tobacco companies could raise the price of cigarettes by 70-80 forints (EUR 0.25) per pack, daily Nepszabadsag said on Friday, citing an official from British American Tobacco (BAT).
Attila Toth, who handles BAT’s relations with the government, told the paper that the sector had not generated “extra profit” for years. The tax will leave the sector with no other alternative but to raise prices, while the black market, estimated at 12 percent already, will grow, he added.
Toth said the sector pays an annual 425 billion forints into the central budget.
The tax was proposed in a bill submitted to Parliament by an MP of governing Fidesz on Thursday.
The progressive tax would be set at 0.2 percent — namely at least 30 million forints — on net revenue of up to 30 billion forints, at 2.5 percent for 30 billion forints to 60 billion forints and at 4.5 percent for anything above that.
The proceeds from the tax would be earmarked exclusively for financing state-funded health care.
The tax aims to create a “fair sharing of the public burden” and to finance the restructuring of the health-care system, according to its author, MP Kristof Szatmary.
Because it is a one-off tax, “tobacco industry companies will, in reality, bear the brunt of the burden, and market players will not pass on the burden to consumers”, according to the bill’s justification.