Fiscal service again proposes floor tobacco prices

The State Fiscal Service again proposes the government introduce floor tobacco prices, citing shortfalls to the budget as companies decrease upper prices.

"This is a mechanism for preventing the shortfalls to the budget. One of the reasons is the reduction of upper retail prices of cigarettes started by tobacco companies from October 2015 and continued in 2016," according to the materials to the draft cabinet resolution on setting the floor wholesale and retail prices of tobacco products, tobacco and industrial tobacco substitutes, the State Fiscal Service's said on a post to its website.

The authority proposes setting the floor wholesale price of a package of filtered cigarettes at UAH 14.06 and the retail price – at UAH 15.74; a package of unfiltered cigarettes – UAH 13.40 and UAH 15 respectively.

The wholesale price of 1,000 unfiltered cigarettes could be UAH 669.77 and the retail price – UAH 750.14, and for filtered cigarettes – UAH 702.77 and UAH 787.10 respectively.

The floor wholesale price of tobacco could be set at UAH 28.12 per kilogram and the retail price – UAH 531.90 per kilogram.

According to the authority's analysis, the calculated shortfalls to the budget after the reduction of cigarette prices in 2015 came to UAH 546.3 million, including UAH 420 million of value added tax (VAT) and UAH 126.1 million of the 5% excise duty from retail sales.

In January through February 2016 the shortfalls reached UAH 308.4 million, including UAH 237 million of VAT and UAH 71.2 million of the excise duty.