Excise duties from various groups of goods in Ukraine to be balanced, says expert
Kyiv, June 10 (Interfax-Ukraine) – The revenue from excise duties for various groups of goods on which excise duties are imposed (alcohol, tobacco, fuel, etc) should be balanced, Board Chairman of the Institute for Economic Research and Policy Consulting Ihor Burakovsky has said.
"In the conditions of globalization and consumption of various types of goods, we should always look at the increase in the excise duties with all relevant consequences for the market," he said at a press conference at Interfax-Ukraine.
According to the Institute for Economic Research and Policy Consulting, referring to information from the State Treasury Service, the share of revenues from excise duties on tobacco came to 61% in 2013, that of liquors and vodka – 18.5%, fuel – 18%, beer – 8% and wine – 3%.
The Institute for Economic Research and Policy Consulting conducted a study on the increase of excise duties on tobacco and its influence on the market.
According to the study, due to the increase in excise duties on tobacco by 25% from July 1, 2014, consumption of cigarettes will fall by 12.3%, their legal production – by 12.6%, and the share of smuggled goods will grow by 1.1 percentage points, the share of the shadow production will be up by 0.7 percentage points and revenues of the budget will decline by 9.8-12.7%.
Burakovsky believes that the advance payment of the excise duty in the tobacco sector should be canceled and the system existed before January 1, 2013 should be returned.
The government should harmonize excise duties on cigarettes with filters and without filters, which will cut the differentiation of prices of tobacco.
The above-mentioned measures will allow increasing competitiveness of legal products compared to smuggled and counterfeited products.
As reported, Ukraine from July 1, 2014 will increase excise duties on cigarettes.
The specific excise rates on non-filter cigarettes are increasing from UAH 77.5 per 1,000 units to UAH 96.88 per 1,000 units, filter cigarettes from UAH 173.2 per 1,000 units to UAH 216.5 per 1,000 units; raw tobacco, manufactured tobacco and its substitutes, tobacco extracts and essences, cigars and cigarillos from UAH 217.6 per kilogram to UAH 272 per kilogram. The ad valorem tax on tobacco products remains at 12%.