Price increases for tobacco products are being planned at the European level, with Cyprus among the countries that will need to adjust their minimum excise tax rates. The issue is expected to be discussed next Monday at the European Union’s Economic and Financial Affairs Council, with the changes affecting both conventional cigarettes and e-cigarettes and heated tobacco products.
The goal of the proposed revision is to increase minimum tax rates and reduce the disparities observed among member states. The new rates are expected to take into account each country’s economic situation, as well as its prevailing price levels.
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However, there is currently no clear picture of the extent of the increases that will be reflected in the final price paid by consumers, as negotiations are still ongoing. In fact, according to the legal advisor to the Consumers’ Association, Virginia Christou, reactions from tobacco companies are expected, and for the proposal to move forward, unanimous approval from the member states is required.
What smokers pay today in Cyprus
Speaking on the Alpha News program, Virginia Christou explained how conventional cigarettes are currently taxed in Cyprus, noting that the price of a pack includes three different tax components.
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Specifically, a 20-cigarette pack is subject to an excise tax of 1.10 euros, as well as an additional 34% tax on the maximum retail price set by the importer or the product’s distributor. VAT, which amounts to 19%, is also added to the final price.
As he explained, tobacco companies, importers, and distributors set the maximum retail price at which they wish to sell their products, and the government then adds the applicable excise taxes.
E-cigarettes are also in the spotlight
At the same time, the debate over tax increases is not limited to conventional cigarettes. New forms of tobacco products are now also in the spotlight, as consumers’ shift toward e-cigarettes and heated tobacco products is causing growing concern among international health organizations.
As Ms. Christou noted, this is an issue that has been of concern to the World Health Organization for years, as it has recorded a decline in the number of conventional smokers. According to her, the Organization’s latest report shows a 27% decline.
However, this decline does not necessarily mean that users have given up nicotine, as some of them appear to be turning to alternative products.
For example, the legal advisor to the Consumers’ Association reported that approximately 100 million people in Europe vape, while 15 million children and adolescents aged 13 to 15 use new forms of tobacco products, primarily e-cigarettes.
In this context, the European Union seeks to include these specific products in the new tax framework by setting minimum tax rates.
The Unique Situation of Cyprus and the Occupied Areas
The issue takes on a particular dimension for Cyprus, as, as Ms. Christou pointed out, the market for tobacco products in the occupied territories must also be taken into account.
The difference in taxation may influence consumer habits, given that many consumers travel to the occupied areas to purchase tobacco products, where no such taxation applies.
Consequently, any increase at the national level could further affect purchases from the occupied territories—a development that, as he noted, should be taken into account when making final decisions.
Consultations at the European level are expected in the coming period to clarify the content of the final proposal, any price increases that may result, and, most importantly, whether these will be passed on to consumers.
