The prices of cigarettes and tobacco are likely to rise in the Czech Republic in the near future, the Czech News Agency reported on Friday, citing the finance ministry’s plan to gradually increase consumer tax on tobacco and cigarettes in the next three years.
According to the ministry, the increased consumer tax will reflect the anticipated rise in salaries. The ministry’s prognosis released in November expects wages to increase by 5.2 percent in 2021 and 4.7 percent in 2022.
The three-year plan also envisages a drop in the consumption of tobacco and cigarettes. “This plan brings the “certainty and predictability” the tobacco industry was calling for. The plan is conceived for three years and, just like the current plan for 2020, it won’t make cigarettes less financially accessible,” Finance Minister Alena Schillerová told the Czech News Agency.
However, tobacco companies say the ministry should be careful in raising the consumer tax, warning that price hike could lead to an increase in black market sales.
The government recently approved a Finance Ministry proposal to impose a higher consumer tax on tobacco, sports and gambling in 2020.
Under the proposal, the tax on cigarettes and tobacco should go up by 10 percent, while that on spirits by 13 percent. Certain forms of gambling should also see a tax increase from 23 to 25 or even 30 percent.
The proposed hikes would increase state revenues by approximately CZK 10 billion a year. Although the Senate returned the proposal to the lower house, it is likely to get approved during by the deputies during their session next week.
While the ministry expects the price of a packet of cigarettes to rise by around five crowns next year, tobacco companies say consumers are likely to pay an extra 12 or 13 crowns.
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