cigarette price — cigarette price — Kiosk owners in Cyprus are calling for the government to intervene and seek an exemption from the EU regarding a looming increase in tobacco taxes. This increase threatens to nearly double the price of cigarettes and roll-ups, along with introducing taxes on e-cigarettes, heated tobacco, and nicotine pouches.
- The kiosk owners in Cyprus remain vigilant, as the potential consequences of these tax increases loom large over their businesses and the local economy.
The association representing kiosk owners, known as Sykade, expressed their concerns in a letter addressed to the finance ministry, emphasising that an alarming 50 per cent of their revenue stems from tobacco sales. They argue that the proposed price hikes will lead to a surge in smuggling from the northern part of the island, resulting in decreased business for kiosks, potential closures, and increased unemployment, all of which would contribute to further losses in tax revenue.
Cigarette price: Concerns Over Smuggling and Economic Impact
Sykade highlighted the unique challenges faced by Cyprus due to its division, making it significantly more challenging to combat rampant smuggling. According to their findings, illegal trade has reached critical levels, with 12.8 per cent of cigarettes and 52.6 per cent of rolling tobacco believed to be smuggled from the north. In the case of heated tobacco products, the smuggling rate is estimated at around 25 per cent.
The financial implications of these smuggling activities are stark. Reports from KPMG and AC Nielsen suggest that Cyprus loses at least €50 million annually in tax revenues and VAT due to this illicit trade. Over the past decade, around 600 kiosks have shut down, a direct consequence of diminishing legal tobacco sales.
Proposed Price Changes Under EU Directive
The EU directive set to take effect in January 2028 proposes significant increases in tobacco taxes. A pack of 20 cigarettes could see prices rise from €4.70 to €7, while rolling tobacco could escalate from €7 to €13. The new tax structure would also apply to e-cigarettes and heated tobacco for the first time, effectively doubling their prices.
Sykade warns that such increases will exacerbate illegal trafficking from the occupied territories, further undermining legitimate businesses. They estimate that 126 million cigarettes and 162 tonnes of tobacco are smuggled annually from the north.
The Call for Exemption
In light of these challenges, Sykade is requesting that Cyprus be considered a state with “special economic or geographical conditions” to seek an exemption from the EU’s strict tax directives. They argue that increasing legal taxes in this environment will not deter consumption; instead, it will fuel smuggling and deprive the state of much-needed revenue.
Current Smoking Rates and EU Objectives
Cyprus has one of the highest smoking rates in Europe, with approximately 34 per cent of the population identified as smokers. This figure rises to 46 per cent among men and 22 per cent among women. Last month, Wopke Hoekstra, the Commissioner for Climate Action and Clean Development, stated that the reform is essential for reducing smoking rates across Europe, with a goal of bringing the rate below five per cent by 2040.
Despite the EU’s intentions to generate an additional €15 billion in revenue and save nearly €6 billion in healthcare costs associated with tobacco-related illnesses, several member states, including Italy, Bulgaria, and Romania, have raised concerns that steep excise hikes could exacerbate illicit trade.
The kiosk owners in Cyprus remain vigilant, as the potential consequences of these tax increases loom large over their businesses and the local economy.
