Czech government proposes higher tobacco taxes

Recently, according to documents submitted by the Czech Finance Minister, Zbyněk Stanjura, the Czech government is planning to increase tobacco consumption taxes, impose higher taxes on heated tobacco and introduce new taxes for e-cigarettes.

According to the proposal, the tobacco consumption tax will increase by 10% in 2023, and then increase by 5% annually from 2025 to 2027. The tax rate for heated tobacco products is currently about one-fifth that of traditional tobacco, but this ratio will rise to 29% in 2024. Additionally, the new electronic cigarette consumption tax will be based on the European Tobacco Products Directive (TPD).

The consumption tax in Czech Republic has been raised, resulting in at least a 4 koruna (equivalent to RMB 1.5) increase in cigarette prices starting from 2023.

Jiri Sochor, a spokesperson for Japan Tobacco International (JTI), stated that the tax changes will result in an average increase of 8 to 9 Czech crowns (approximately 0.31 to 0.36 USD) for traditional cigarettes and an increase of 3 to 4 crowns (approximately 0.12 to 0.16 USD) for heated tobacco products by 2024. However, the final price will depend on specific products. JTI sells brands such as Camel and Winston in the Czech Republic.

A spokesperson for British American Tobacco (BAT), Tomas Tesar, has stated that cigarette sales in the Czech Republic have declined by roughly a quarter in the past three years as consumers are turning towards heated tobacco products, which are perceived as less harmful to health. Therefore, taxes on heated tobacco products should be lower than those on traditional tobacco.

In recent years, the price of cigarettes in the Czech Republic has approached that of Germany, resulting in a significant decrease in the number of cigarettes sold to German consumers near the Czech-German border. Four years ago, this segment of cigarette sales accounted for 33% of the market, but today it is only 10%.

Currently, the proposal must still go through government discussions and the legislative process before it can finally be determined whether or not to be implemented. The government will consider various factors, including public health, fiscal revenue, and market conditions, to make a decision.

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The government plans to increase taxes on tobacco. The price of a pack of cigarettes would rise by at least eight crowns.