The excise duty on cigarettes will not increase as of April, as scheduled, but as of May at the earliest. The reason is that it is impossible for the bill to go through the entire legislative process by April. The Czech Republic has to raise excise duties on tobacco products after its entry into the European Union. A first raise in excise tax took place last year.
Note that the excise tax hike in 2004 had a negative impact on the PMCR’s sales in the 1H2004, however, we do not expect that the relatively small postponed of further excise tax hikes will have any significant impact on the company sales on 2005. In addition the excise tax should reach 57% of the retail price by January 1, 2007 and at least EUR 1.28 per pack by end 2007.
Tomáš Gatěk, Patria Finance