Europe under the threat of contraband of cigarettes from Ukraine

Most likely, in the near future the share of illicit cigarettes from Ukraine in the European markets aloud will grow up.

Yesterday the President of Ukraine has put a veto for the law, raising excise rates on tobacco products. The European Union has opposite changed the excise policy, now excise rates in the countries of Europe will be increased till 2014-2018. The Ukrainian state customs says that volumes of contraband of cigarettes will sharply grow from Ukraine, manufacturers and distributors of tobacco consider that the special increase in volume of contraband will not be.

The law, ветированный the president, provided serious increase of excise rates. It was expected that the rise in prices for cigarettes in a retail network will reach 40 %. Practically there were no doubts that Victor Yushchenko will approve the law, since all previous similar bills met its unequivocal support. However this time the president nevertheless used the veto. Most likely, the fear of that sharp increase in excises will seriously reduce local manufacture and will increase quantity of contraband from Russia and Moldova, has served its purpose. Besides curtailment of production and shares of legal cigarettes in the market inevitably would lead to that deductions in the state budget gradually would become ever less.

According to the President of Ukraine, the Supreme Rada has broken the Budgetary code which provides impossibility of change of rates of taxes if prior to the beginning of a fiscal year remains less than 6 months. Thus, opinion of the President the unequivocal: while it is necessary to refuse such high excise rates.

Representatives of the tobacco companies confirm: the offered law would lead to sharp increase in trade in illegal tobacco production, to reduction of the legal market and, accordingly, to reduction of receipts in the budget. Given associations "Укртютюн" testify that this year in the country falling of manufacture and without that has made 13,7 %.

Let's remind that the day before yesterday (on November, 10th, 2009) the European Union Ministerial council on economy and the finance has made the decision on change of an excise policy. Since 2014 in the European Union countries the excise will increase about 64 euros for one thousand pieces to 90 euros for one thousand pieces, the excise on a retail price will grow from 57 % to 60 %. For some countries the excise in which has not reached current level of excise rates in EU, the transition period during which excises should reach the specified figures will be created. Till 2018 the transition period will be resolved for Bulgaria, Hungary, Greece, Latvia, Lithuania, Poland, Romania and Estonia. The European Union tax laws are constructed in such a manner that of 8 countries to which the transition period is given, probably, will establish an interdiction for import of cigarettes over 300 pieces on the person.

From the beginning of 2011 the excise rate will increase by tobacco, from now on its size also there will be 40 euros for kg, this excise loading will increase for buyers cost of cigarettes by 40 %. According to plan by 2020 the excise will grow to 60 euros for kg that means rise in price of retail production on 50 %.

The main customs officer of Ukraine Anatoly Makarenko already did not so long ago statements that Ukraine actively imports illegal cigarettes into the EU countries. After events on November, 10th the source from the State customs has confirmed forecasts for contraband increase, after all with increase of the duty EU market turns to the super-favourable. The contraband most part passes to Europe through a line of border with Hungary, Poland, Slovakia and Romania. The basic part of illicit tobacco gets on the markets of these countries, but big enough parties are forwarded further to Europe. The price for a pack of cigarettes aloud grows with advancement on the West, and transportation of cigarettes at all is not a problem – after all borders in the European Union are opened.

Growth of illicit deliveries is not favourable to manufacturers, after all the tobacco companies, as a rule, are transnational. Experts inform that some the tobacco companies, whose representations work in Ukraine, have already signed the agreement with the European Union on which occurrence in the European countries of illicit production will automatically mean the penalty for the owner of this or that tobacco mark.