KYIV. Feb 11 (Interfax-Ukraine) – Revenue of the national budget from the excise duties on tobacco grew by almost one fourth in 2015, to UAH 22.2 billion, the Ukrainian Center for Tobacco Control reported on Tuesday.
The increase in revenue by over UAH 4 billion was recorded without a rise in sales of cigarettes that did not change compared to the previous year – 73 billion cigarettes. Budget revenue grew, as in July and September 2015 the excise duties were increased. In addition, in January 2015, the tax on unfiltered cigarettes was increased to the level of filtered cigarettes. Finally, the average price of a package of unfiltered cigarettes grew from UAH 6 to UAH 11, and their sales fell from 12.7 billion in 2014 to 5.8 billion in 2015. Imports of cigarettes fell last year from 6.5 billion to 4 billion.
Cigarette production in 2015 grew by 8%, to 93 billion from 86 billion. This is linked to a rise of exports to 23 billion from 18 billion and a decline in imports.
The center said that in the fourth quarter of 2015 sales of cigarettes grew to 22 billion, while in the previous three quarters it was 17 billion on average. Growth in sales was artificial provoked by price wars of tobacco corporations starting from October 2015. They aimed at not allowing growth of the excise duties in 2015.
“Despite price wars budget revenue in the fourth quarter grew to UAH 6.6 billion, while in the previous quarters they were UAH 5.2 billion,” Head of the tobacco control department of the Ukrainian Institute for Strategic Studies of the Health Ministry of Ukraine Kostiantyn Krasovsky said.
Tobacco corporations artificially increased cigarettes sales in the fourth quarter of 2015, waiting for a large rise in the excise duties from January 2016. Thus, the excise duty was paid at the rates of 2015, and cigarettes were left at warehouses and were sent to the retail chains in 2016. A temporary fall in sales of cigarettes in the first months of 2016 could be seen. If sales of cigarettes in 2016 falls to 66 billion (10% down on 2015), thanks to a rise in the excise duties budget revenue this year would be at less than UAH 28 billion.
