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Price of Tobacco Products to Increase Significantly in 2021

Fanni Kaszás 2020.10.16.

In Hungary, the tax on cigarettes does not comply with the European Union regulations requiring the taxation of tobacco products as it is too low, writes mfor.hu. Thus, the Hungarian government submitted a tax bill on Tuesday evening which states that the excise tax on tobacco products will be raised twice in the coming months, increasing the price of the products significantly.

Although excise duties on tobacco products have been raised in Hungary in recent years several times and there has been a period when Hungarian taxation met EU expectations, but since then the forint has lost 15% of its value against the euro, so the price of tobacco products again does not meet EU regulations.

The government has previously indicated that it plans to settle this issue in 2021, and the details have just been revealed in a tax bill submitted to Parliament on Tuesday. According to the proposal, from January 1st to the end of March, the excise tax will be HUF 24,000 (EUR 65) per thousand threads of cigarettes and 23% of the retail price, and from April, it will grow to HUF 26,000 (EUR 71) and HUF 39,300 (EUR 108) respectively.

According to the article of the Mfor, a tobacco product, including current taxes (fixed and percentage excise duty, as well as VAT) and taking into account the margin of the supplier and the traffic, amounts to approximately HUF 1,200 (EUR 3,3).

The changes mean that a box of a 19-thread cigarette brand, one of the cheapest products, which has cost around HUF 1,200 so far, will be available at around HUF 1,500 (EUR 4,1) from January and from HUF 1,650 (EUR 4,5) from April.

Besides fulfilling the EU’s taxing expectations of tobacco products, higher taxation will also be beneficial for the state budget, as the government is eager to find extra funds to compensate the loss in income due to the coronavirus crisis.

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