The president signed into law a bill that calls for an excise-tax increase on cigarettes as of January 2004. We estimate that the higher tax will raise the effective excise-tax burden to more than 44% from the current 40% of the retail package price of the leading domestic cigarette brand, Petra, a PM CR brand (recall that the EU requirement calls for 57% of the retail package price by 2007). This will raise the per-pack retail price of Petra by 14% next year, to CZK 46 (USD 1.66), we estimate, and will negatively affect PM CR's sales and performance next year. Expected.
Jan Hájek