Russia to Introduce State Control over Tobacco Industry

On March 8th, according to Russian media outlet RG.RU, the tobacco industry in Russia will introduce national control measures similar to those for alcohol, including production permits, a unified information system and criminal liability for violations. The proposed legislation from the Ministry of Finance will be discussed at a government meeting on March 9th.

According to the Ministry of Finance, the purpose of this bill is to introduce a comprehensive national regulatory system to manage the tobacco industry. This type of regulatory model has already been applied in the alcohol market. Currently, there are problems with management in the Russian cigarette market, with one out of every seven packs of cigarettes sold being illegal. Therefore, the government plans to tighten regulations in this industry.

A new bill is requiring licenses for the production and import of tobacco, nicotine-containing products, and their raw materials. Additionally, producers are obligated to register their main equipment for manufacturing these products. If unused, the equipment must be sealed. Equipment used in illegal production will be confiscated. All product and material records will be tracked through the "Honest Label" tagging system, ensuring comprehensive government regulation, according to the Ministry of Finance's explanation.

The bill also includes other measures to prevent illegal production and trade: prohibiting the sale of tobacco products and nicotine-containing products in non-consumer packaging, and requiring the presence of accompanying documents and labeling in their transactions. "The implementation of this bill will help reduce the circulation of illegal tobacco and nicotine-containing products," the department believes. Meanwhile, experts believe that in addition to production, retail also needs license control, as the share of illegal tobacco products has increased 12 times in the past eight years.

According to data from the Ministry of Industry and Trade, the illegal tobacco trade in just the first nine months of last year resulted in a loss of 61.6 billion rubles (approximately 5.6 billion yuan) to the budget. One of the reasons for the increase in illegal tobacco trade is the incomplete legal reforms.

Sergey Ryabukhin, the First Deputy Chairman of the Budget and Financial Markets Committee of the Russian Federation Council, believes that long-prepared regulatory measures have become urgent. He thinks that national regulation of the tobacco industry would help monitor the quality of tobacco products.

However, industry experts have criticized the bill. For example, Pavel Shapkin, chairman of the National Consumer Rights Protection Union and head of the National Center for Alcohol Policy Development, believes that a license system should be implemented for the retail sale of tobacco. He believes that licensing does not eliminate the possibility of illegal products being sold at the retail level. Dimitriy Vlakhmiriov, chairman of the Tobacco and Nicotine Product Joint Enterprise Association, pointed out that the bill only applies to nicotine-containing products.

Riyabukhin believes that the proposed bill should be passed as soon as possible, with further improvements to be made based on practical experience. The next step should be to coordinate tax rates across the entire Eurasian Economic Union (EAEU) to combat illicit tobacco products.

References:

The Russian Ministry of Finance has introduced a bill to regulate the tobacco industry under state supervision.