An excise tax on cigarettes will increase to 44% in 2004

The lower house of Parliament outvoted Senate’s refusal of an excise-tax increase on cigarettes. We estimate that the higher tax will raise the effective excise-tax burden to more than 44% (as of January 2004) from the current 40% of the retail price (recall that the EU requirement calls for 57% by 2007). This will raise the per-pack retail price of the leading domestic cigarette brand, Petra (a PM CR brand), by 14% to CZK 46 (USD 1.66) next year, we estimate. Expected. The increase is to be signed into law by the president; should the president veto the bill, we expect the lower house to outvote the veto.

Jan Hájek