The European Commission intends to allocate 15% of tobacco excise duty revenues directly to the EU budget.
The Czech Republic will have to transfer an additional 8 billion korunas, which will lead to an increase in cigarette prices of approximately 1–2 euros per pack.
The European Commission has included tobacco excise duty in the list of new sources of EU revenue and proposed amending the excise duty directive. On its initiative, 15% of tobacco product taxes will be transferred directly to the European treasury.
For the Czech Republic, this means an annual payment of around 8 billion crowns, which would otherwise go to the national budget. To meet EU requirements, cigarette prices in the Czech Republic may rise by €1–2 per pack, as the excise duty rebalancing will affect all types of tobacco, including smoking and chewing tobacco.
The European Commission also plans to cover the latest nicotine products (vaporisers, nicotine pouches) by setting minimum excise duty rates for them, albeit lower than for traditional cigarettes.
The aim of the initiative is to raise €25-30 billion annually to cover payments on the EU’s debt and recovery programmes. At the same time, tobacco excise duty is a fiscal and “price” instrument to reduce consumption.
The Czech authorities have expressed concerns that the sharp tax increase in 2020 led to a boom in the black market, with around 20% of cigarettes in the Czech Republic not being taxed. The new increase could intensify illegal trade and cheap smuggling from neighbouring countries.
