For the last 13 years, the price of a pack of cigarettes in the Czech Republic has risen by an average of three crowns per year.
But now even a higher tax rise will take effect, meaning that cigarettes and tobacco products will increase in price by between 4 and 6 crowns. There are two main reasons – an increase in excise tax on tobacco products (by 5%) and an increase in selling prices from manufacturers.
“In total, we should expect a rise in the price of classic cigarettes by at least 6 crowns per pack, shredded tobacco by at least 9 crowns per pack, and heated tobacco by 5 crowns,” said Stepan Krzeczek, chief economist at BH Securities, told Právo.
According to the authorities’ estimates, the increase in the tobacco excise tax for the year will bring the treasury an additional 3 billion crowns.
However, tobacco companies have raised concerns about the size of the tax increase, with reports that smokers with limited financial resources will turn to the black market to buy cigarettes, and that smuggling rings are already preparing to expand their operations in the Czech Republic.
The black market already accounts for 7% of cigarettes sold in the Czech Republic. The increase in tax revenues for the government may also be limited by a drop in tourists from Germany and Austria crossing the border to buy cheaper cigarettes, or Czech citizens near the Polish or Slovak borders visiting those countries to pay less per pack.