Excise tax for rolling tobacco should significantly increase from 2008

According to daily MF daily, excise tax for rolling tobacco should increased by 33% from the beginning of 2008. Tobacco excise tax should reach at least 2/3 of taxes applied for cigarettes. If the Parliament approves new bill, tobacco excise taxes should reach CZK 1,200 per kilogram (EUR 42.5). Currently it is taxed CZK 905 per kilogram (EUR 32), which is minimum level requested by EU.

Our view:
This information about the increase above the EU level for rolling tobacco is not new and it has been presented already at the end of March, however the increase is 10% higher than initial indication. As we then mentioned almost 100% of PMCR’s production are cigarettes where the taxation should reach only minimum EU required level. Mildly positive about this increase is fact, that the gap between low price segment and rolling tobacco will be diminished, thus decreasing consumers incentives to shift in between these categories.