The excise tax on cigarettes next year, could grow even stronger than planned in the amendments to the Tax code adopted by the state Duma in the first reading, the newspaper “Kommersant”.

One market participant said that this issue will be discussed in the government on Wednesday. The new rule may be made in amendments to the Tax code for the second reading, said another source of the newspaper.
The initiator of the increase in the ad valorem component of the Ministry of Finance made.
On 2 November the state Duma has already approved the increase of a specific section of the cigarette excise tax next year to 10% – to 1.56 thousand roubles for 1 thousand cigarettes.

The specific part of excise duty paid by all manufacturers, depending on the number of sold cigarettes. The ad valorem part is calculated based on the traded price of cigarettes (this year it will pay those who sell cigarettes more expensive 71,7 rubles per pack).

The largest tobacco manufacturers concerned about the prospect of growth and the ad valorem component, appears from their letters to the Prime Minister Dmitry Medvedev and state Duma Chairman Vyacheslav Volodin. The signatories of the appeal top executives of tobacco companies being asked to keep the ad valorem component in 2017 at the rate of 13%.

The increase in the ad valorem component has already resulted in increasing the share of cheap cigarettes. In 2014 advalor was 8.5% in the first quarter of this year, according to Nielsen, cheap cigarettes (up to 73 rubles per pack) accounted for 34%. By 2016 advalor increased to 12%, the share of cheap cigarettes was 37.3% in the third quarter.

Director of corporate relations “BAT Russia” Alexander Ljutyj suggests that increasing the ad valorem part of the excise tax, the government wants to increase the tax burden on smokers in the premium segment. However, in his opinion, the increase will not affect only wealthy citizens.

This year and the minimum rate of excise duty and the ad valorem component must pay everyone who sells a pack of cigarettes more expensive than 71.7 ruble, that is 92.1% of the market. The head of branch news Agency “Russian tobacco” Maxim Korolev explained to the publication that a significant increase in the ad valorem components makes the prediction and the administration of the tax. According to him, some countries even refused the ad valorem part of the excise tax.

The excise tax on cigarettes in Russia can grow stronger planned 09.11.2016

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