Significant burdens on the pocket of smokers are expected to bring the proposed revision of the European Commission's directive on tobacco taxation, which provides for a sharp increase in the minimum specific consumption tax (SCT).
The gradual implementation of the new measures is expected to increase the price of the package, drastically changing the market situation.
The new European data and Greece
The Commission's proposal radically changes the tax map for tobacco products, as it provides for an increase in the minimum threshold of the EU's VAT from 90 euros to €215 per 1,000 cigarettes (increase 139%).
For Greece, the data are as follows:
- Today, the VAT in our country amounts to €137 per 1,000 cigarettes.
- In order for Greece to comply with the new European minimum by 2028, it will require annual increases of 12%.
- Since more than 80% of the price of a package in Greece is already made up of taxes (VAT and VAT), most of the cost will inevitably be passed on to the final consumer.
The general market estimate is that within the next four years, the price of a typical pack of cigarettes may reach EUR 7, increasing the annual costs of a regular smoker by hundreds of euros.
The risk of a surge in smuggling
One of the main concerns raised by the new tax policy is the further strengthening of the «shadow» market.
According to research by Oxford Economics, Greece already has a negative record:
- Illegal cigarettes are the main source of 17.7% of domestic market.
- This percentage is almost twice the European average.
The country's geographical location, which is close to lower-cost markets and key trafficking routes, facilitates smuggling. Analysts warn that as the price gap between legal and illegal products widens, the incentive for consumers to turn to the black market will increase, upsetting an already extremely delicate economic balance.
