cigarettes and tobacco products.
Additional revenues of at least eur 350 million. euros are included in the semester in state funds due to the “prior notification” of the increase of the excise tax, which is the first time in the Greek chronicles, as is customary, the special taxes are to be announced and to be implemented from the submission of the bill, not even by adoption.
The companies in the industry, already in May, had confirmed the rumours of an impending increase in the tax on cigarettes, began to increase their stocks in view of the increase of the tax from the new year. The “cheap” stocks –with the logic that they were acquired with the current tax scheme– can be used as a “weapon” for the strengthening of the market shares, even after the change of the time businesses will be able to supply the market with cigarettes without to proceed to a change of price.
For how long will this happen? According to executives in the market, the companies provided reserves of the order of 3-5 months depending on the policy of each company and, of course, depending on the liquidity it offers. What is the problem for the ministry of Finance? That the increase of the tax revenue that is recorded now is temporary. The storage has already been reduced –the law was not intended to prevent the phenomenon, although the companies had the foresight before it tabled the bill– while as long as you spend the months so you are limited orders of business. Especially since the new year, that the tax increase will no longer be a fact, it is extremely likely that the revenue from tobacco products to experience a very great reduction, as well as:
1. Will this affect the consumption due to the increase of the tax.
2. The companies will reduce their orders in order to “push” their stocks.
3. This will enable the community directive for the change of packages that now will have 65% of their surface, a “hard” warning messages for the health.
The evidence from the implementation of the budget in the 5μηνο demonstrate that the greater part of the excess observed in the tax revenue against the target, due to the cyclical increase in the excise tax and VAT on cigarettes. In the period January – May, tax revenues had exceeded target by 356 million. euro and amounted to € 15,685 billion. euros against a target 15,329 billion. euro. Of these 356 million. eur 170 million. euro appeared in the code of the VAT on tobacco products and “other excise duties”, where the lion’s share occupies the excise tax of tobacco products.
Exceeding the target in the tobacco may appear twice in the data of June and July since storage peaked in the first days of May, i.e. before the act was passed with the measures (p.p.: these purchases will be reflected in the tax revenue in June, which will be announced by the end of the month).
It is indicative that until April, there was a shortfall of 55 million. euro against the objective in the taxes of tobacco products. Within a month, the lag was turned in excess of 170 million. euro. Executives in the industry estimate that by the end of the year, the additional revenue for the ministry of Finance may reach $ 500 million. euro, a sum that will be “missing” from the budget of the next year.
Source
How the smoke “launched” soaring state revenues
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