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Steep Tobacco Price Increase Too Much for Hungarians’ Pockets

Ábrahám Vass 2021.04.06.

Hungary once again raised the excise tax on tobacco, taking the price of a pack of cigarettes to historic heights. According to a survey, this could eventually drive many to give up cigarettes.

After failing to comply with the EU regulations on the tobacco excise tax for years, it was eventually the Court of Justice of the European Union’s (CJEU) recent statement that drove Hungary to hike the tobacco tax. While the EU reasoned that by failing to reach the threshold, Hungary was distorting competition within the bloc and violating EU health protection regulations, the government said it wanted a gradual hike and a “fairer system,” one that takes into consideration the differences between member states’ tax systems and their populations’ varied income levels. In the Orbán government’s view, the EU regulations also neglect the fact that countries on the EU’s eastern borders have to fight hard against cigarette smugglers and black-market imports.

European Court: Hungary Failing to Comply with Tobacco Excise Tax Hike
European Court: Hungary Failing to Comply with Tobacco Excise Tax Hike

Hungary has failed to comply with European Union regulations by keeping the excise tax on tobacco products below the required threshold, the Court of Justice of the European Union (CJEU) said on Thursday. The European Commission turned to the CJEU in October 2019 with the complaint that Hungary had failed to gradually raise the excise […]Continue reading

Fact

Under EU guidelines, the excise tax on tobacco products must reach 60% of the average retail price but at least 90 euros per 1,000 cigarettes. The 60% ratio does not apply to prices above 115 euros per 1,000 cigarettes.

As a consequence, the first hike of 7.3% was introduced on January 1st and an additional 4.8% hike entered into effect on April 1st.

With these two latest increases, a pack of cigarettes now costs around HUF 1,700-1,800 (EUR 4.7 – 5) in Hungary. Or, approximately HUF 200-250 (EUR 0.56-0.69) more than at the end of last year. This means that someone who smokes one pack per day will spend roughly HUF 51-55,000 (EUR 142-153) per month for cigarettes, which amounts to about half of the current net minimum wage.

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Hungarians Turned to Alcohol to Escape Quarantine

Alcohol consumption increased significantly in Hungary during quarantine in 2020, according to statistics published by the National Tax and Customs Administration (NAV). The trends in consumption show that this was not a normal seasonal change, but the direct decision of consumers.  Statistics published by NAV show that in 2020, the restrictions brought on by the […]Continue reading

What would this mean for Hungarian smokers? Although relevant addiction experts tend to insist that it is not the substance to blame for the addiction but the user, a pollster predicted that this increase will eventually have a significant effect on the number of smokers. According to the findings of the joint research of Pulzus Inc. and economic news portal napi.hu, there are roughly 2.5 million smokers in Hungary, nearly one third of the adult population. 23% of smokers claimed that this increased price was already too high, and would quit smoking. 10% said they would switch to the rolling of cigarettes. This is something the government foresaw too, as a result, it raised the price of fine-cut tobacco too although it had fulfilled EU regulations previously. 8% would switch to some kind of e-cigarettes, 22% however, insisted they wouldn’t quit smoking despite the hikes. 37% said they had previously looked for an alternative (rolling or e-cigarettes).

Featured photo illustration by NAV/MTI