Bulgaria’s Parliament approved on November 12 a bill of amendments to the excise and tax warehouse law, increasing the excise duties on cigarettes over a period of two years, starting on January 1 2016.
Cigarette prices were already due to rise on that date, according to a plan adopted by MPs during the Budget proceedings last year, but the latest amendments changed the figures in order to reduce the size of the increase in the price of the low-end, cheaper cigarettes. The goal was to limit the possible incentives for smokers to buy contraband cigarettes, the head of Parliament’s budget committee, Menda Stoyanova, said.
A 2011 EU directive requires EU member states to increase cigarette excise duties to at least 90 euro (or about 176 leva) for 1000 cigarettes by January 1 2018. Bulgaria uses a combination of fixed and ad valorem rates, which, under current legislation, is required to total no less than 148 leva (about 75.7 euro) for 1000 cigarettes.
Under the amendments passed on November 12, the fixed duty will be lowered to 70 leva for 1000 cigarettes, while the proportional rate of the ad valorem component will rise to 38 per cent on January 1 2016, 40 per cent on January 1 2017, and 42 per cent on January 1 2018.
The previous plan envisioned a fixed duty of 101 leva for 1000 cigarettes, with the ad valorem rates set to rise to 25 per cent on January 1 2016, 27 per cent on January 1 2017, and 28 per cent on January 1 2018.
The hike will affect only cigarette prices, as duties on other tobacco products are set separately. Overall, the increase in the excise duty on cigarettes was expected to bring in additional revenue of 119 million leva over the next three years.
(Photo: Amr Safey/sxc.hu)