In the new year, prices for tobacco products will go up again. On average, a pack of cigarettes costs about UAH 9-15. The manufacturers themselves are trying to raise prices gradually, but one way or another, serious growth cannot be avoided anyway.
ElitExpert found out why the price of tobacco products is steadily increasing and does this affect only cigarettes.
How expensive are cigarettes
On January 1, 2021, the specific excise tax rate on cigarettes increased by 20% to UAH 1088,64 per 1000 cigarettes, and the minimum rate is UAH 1456,33 per 1000 cigarettes. This is happening in accordance with the eight-year plan approved by the Cabinet of Ministers, adopted in 2017. According to it, excise duty rates must increase by 20% every hour. That is, the price of cigarettes, which now cost UAH 50, will reach UAH 2024 by 90. At least this would be the case if only the increase in excise taxes affected the price.
After all, the costs of production make their contribution: the increase in the cost of electricity, the size of the minimum wage, and so on. In addition, do not forget that the manufacturers themselves set the markup. None of them is in a hurry to reveal the cost of the product - it is a commercial secret. At the same time, the approximate structure of income from the sale of cigarettes, calculated by the Federation of Employers of Ukraine, is not a secret. According to their data, the cost price in a pack of cigarettes, which is sold for UAH 50, is only about 16-20%. And taxes are more than 70%. Sellers — wholesalers and retailers — get a maximum of 10%.
Not only cigarettes are going up in price
In 2021, liquids for electronic cigarettes should also travel: an excise tax of UAH 3000 per 1 liter of liquid will be introduced on them, as well as mandatory marking with excise stamps and the requirement for sellers to acquire licenses for the production and sale of electronic cigarettes, which is somewhat illogical: for large manufacturers, who pay taxes, this is unprofitable, and their place can be taken by illegals. For example, at the beginning of December, the JTI Ukraine tobacco company announced that it would stop selling Logic Compact electronic cigarettes in Ukraine.
According to the effective regulations of Law No. 466-IX, excise taxes on heated tobacco will increase this year. At the same time, it is very significant: by 320%. Thus, the cost of "joints" will exceed the price of ordinary cigarettes.
No one touches the shadow market
The constant growth of excise taxes is unprofitable for our state, because large suppliers may leave the Ukrainian market or go into the shadows. And this means a decrease in tax revenues: in the last three years alone, the Ukrainian state budget has not received about UAH 8,5 billion due to the smuggling of tobacco products. In 2020, the share of illegals in the country's tobacco market was 6%.
Apparently, the increase in excise duty will have a favorable effect on the development of the shadow business, which, by and large, no one is fighting. Contraband enters the country in huge quantities and is openly sold in the markets of Ukraine.
