Friday, July 18, 2008

EU executive wants higher tax on cigarettes

BRUSSELS, - Minimum duty on cigarettes should increase to reflect inflation, putting all European Union states on an equal footing and weaning more people off tobacco, the bloc's executive said on Wednesday.

"This proposal ... suggests a number of important amendments to existing community legislation in order to modernise and simplify existing rules, make them more transparent and better integrate public health concerns," the European Commission said.

Consumption of cigarettes in the 27-nation bloc fell 10 percent between 2002 and 2006 while excise duties rose by an average 33 percent.

"In order to trigger a similar decline in consumption over the coming five years, further increases in excise duties would be desirable," the Commission said.

A 25 percent hike in cigarette prices would be needed to achieve a 10 percent cut in demand, the Commission said.

The proposal is part of the executive's regular four-yearly update on the bloc's tobacco excise duties. Unanimity among the EU's member states is needed to adopt tax proposals.

The EU executive proposes giving member states greater flexibility in levying excise duties as part of efforts to cut cigarette consumption.

It also wants higher duties on roll-your-own tobacco to bring them in line with tax on cigarettes.

"In line with the structure of minimum rates on cigarettes, it is proposed to introduce a compulsory monetary and ad-valorem minimum requirement for fine-cut tobacco," the proposal said.

This would mean an increase in the minimum rates for fine cut to 60 euros per kilo.

Excise duties on cigars and cigarillos is also needed to take into account inflation for the 2003 to 2007 period, the Commission said.