Smoking decline prompts lower excise revenues

Photo:sxc.hu

The decision by Poland's finance ministry means that 2015 will be the first year without such a hike since 2004.

After years of growth resulting from the increases, budget revenue from the tax declined year-on-year in 2013.

It amounted to 18.21 billion zloty (4.34 billion euro) compared to 18.58 billion zloty (4.43 billion euro) in 2012.

Data from the first half of 2014 shows that the downward trend is continuing. Cigarette excise tax revenues were 8.64 billion zloty (2.06 billion euro).

Lower tax revenues are the result of lower cigarette sales.

In August 2013 Poles bought 3.7 billion cigarettes, 17.1 percent fewer than in the same month of last year, according to data from market research firm Cyber Service.

In January-August Poles bought 29.17 billion cigarettes in total, 3 billion less than in the corresponding period of 2013 and more than 7 billion less than in January-August 2012.

The reasons behind this decline may be higher excise tax, which leads to higher prices, but also the illegal tobacco trade and simply a higher number of people quitting smoking.

According to KPMG, the shadow economy segment of the tobacco trade was at some 13.9 percent of total trade in 2013, standing for some 6.1 billion cigarettes.

Meanwhile the number of smokers in Poland stood at 8.5 million in 2013, according to the Social Diagnosis survey, which is about 25.8 percent of the population.

Some 500,000 Poles have quit smoking over the past two years. Over 19 years the number may be as high as 4 million.

Poland introduced a ban on smoking in public places in 2010. (kw/nh)

Source: Dziennik Gazeta Prawna