Excise Duty 2025. Cigarette prices will increase dramatically. These could be the consequences

“We estimate that a 10% increase in relative cigarette prices reduces the probability of a household purchasing cigarettes by 0.45 percentage points. (…) As a result, higher excise tax rates will reduce the number of adult smokers in 2027 by 220,000 compared to the status quo, of which 42,000 are people with higher education and 178,000 – people with at most secondary education,” the report reads.

“It is assumed in the literature that every 100 people refraining from smoking translates into 30-50 fewer premature deaths. The proposed excise duty increases will therefore reduce the number of premature deaths by at least 66 thousand,” the IBS report states.

Due to lack of data, the calculations do not include children and adolescents.

The authors of the study, however, expect that the increase in excise duty on e-cigarette liquid will significantly reduce e-cigarette consumption among this group. Among adults, assuming elasticities similar to those for traditional cigarettes, the number of e-cigarette users may decrease by 9%.

IBS economists estimate that a 1% increase in the price of cigarettes relative to income reduces the number of products smoked by 0.27%.

“We estimate that total cigarette consumption decreases by 0.4 percent with a 1 percent price increase. On this basis, we expect that the amendment to the Excise Duty Act will reduce cigarette consumption by 6.8 percent in 2027,” it was written.

In 2024, the average salary will allow for the purchase of 54% more cigarettes than 10 years earlier. According to IBS, the implementation of a more ambitious path of increasing excise duty, proposed by the Ministry of Finance in July, will mean that in 2027 the availability of cigarettes will return to the level of 2021, but will still be 30% higher than in 2014.

To ensure that excise tax increases do not have a negative impact on the household budget, according to IBS, a person smoking 14 cigarettes a day in 2024 should limit their consumption to no more than 10 in 2027.

Excise tax on cigarettes will increase by 25 percent in 2025 and by 20 percent in 2026, and on e-cigarette liquid will increase by 75 percent in 2025 and by 50 percent in 2026. – according to information published on the website of the Chancellery of the Prime Minister. An excise tax on vaporization devices is planned – PLN 40 per unit.

The Ministry of Finance announced in July that it wants to make the current roadmap for excise tax more realistic by 2027 by increasing its rates on tobacco products and their substitutes. Excise tax will also cover e-cigarette liquids and vaporization devices. An annual validity of excise stamps for e-cigarette liquid will also be introduced, on the same principles as for excise stamps for cigarettes, smoking tobacco and innovative products.