The Hungarian government started to increase the excise tax on cigarettes in September to meet the minimum expectations of the EU. However, even the highest known level of the taxes will not be able to do so; hence smokers should expect a serious rise in cigarette prices. They plan to increase the price of different types of cigarette substitutions, like the fine-cut tobacco, even though it meets EU regulations.
The Hungarian government continues to increase the price of cigarettes in 2019 as well, reports Napi.hu. There will be a rise in the prices twice: in January and in July. At first, the tax/1000 cigarettes will increase by HUF 1000 (EUR 3) to HUF 18200 (EUR 55), while the tax recommending the EU regulations will increase to HUF 31200 (EUR 94.3) by HUF 1000 (EUR 3) as well. This will be boosted by HUF 1000-1000 more as part of the July increase.
A tax increase can add HUF 40/packet if the producers validate it in traffics. The prices were between HUF 1050 and 1410 (EUR 3.17 and 4.26) in December depending on the brand; the most expensive cigarettes could exceed the HUF 1500 (EUR 4.5) margin next summer.
The increase is necessary because Hungary is the farthest from meeting the criteria of the EU regulations; what is more, according to the most recent statistics, those countries which do not meet these regulations are only a few tenth percents away from the minimum, while Hungary needs 5.5% more to improve.
The excise tax must reach 60% of the weighted retail price or it should be at least EUR 115/cigarettes.
But what does the price of cigarettes include?
The average retail price of cigarettes in the first half of 2018 was HUF 55936 (EUR 170) in Hungary. The excise tax was HUF 16200 (EUR 49), while the proportional excise tax was HUF 13984 (EUR 42). The producer, transporter and the sellers share HUF 13860 (EUR 41.9) while VAT (value added tax) was HUF 11892 (EUR 36)/1000 cigarettes. This means that the excise tax of a HUF 1119 (EUR 3.4) packet is HUF 604 (EUR 1.8), which is 54% of the price. This should have been increased to 60% by the end of 2017, even though Hungary could not meet the expectations.
The Hungarian government took strict measures against smoking earlier as well. Minister János Lázár was appointed as commissioner to promote non-smoker interests.