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Friday, October 22, 2021

Excise duty increase – how much more will we pay for vodka, wine, beer, alcohol, tobacco, cigarettes? Calculations by the Ministry of Finance

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Excise duties on alcohol are expected to increase by 10 percent in 2022 and by 5 percent each year over the coming years until 2027. The increase is also to apply to cigarettes, according to the list of legislative works of the government. According to the statement of the Ministry of Finance, the increase in the rate for a half-liter bottle of vodka means that in 2022 it will cost about PLN 1.50 more than now. In the case of a bottle of wine, the increase will be about 16 groszy, and for a packet of cigarettes – 30 groszy.

The bill announced in the list of legislative works of the government provides for an increase in the rates of excise duty on excise goods that are stimulants, i.e. ethyl alcohol, beer, wine, fermented beverages, excluding cider and perry (alcohol made from pears), intermediate products, cigarettes, smoking tobacco and innovative products. As stated in the list of works, the last one change in excise duty rates on alcohol and tobacco took place on January 1, 2020 and was 10 percent.

Higher excise duties on alcohol and tobacco – how much more will we pay?

“The main change is to increase the excise duty on stimulants (alcohol and cigarettes) by 10 percent and proposing the Excise Map, i.e. the schedule of changes in tax rates postulated by the market for the following years – 5 percent y / y in 2023-2027 (in the case of alcohol) and 10 percent in the years 2023-2027 (in the case of cigarettes, smoking tobacco and innovative products) “- wrote the Ministry of Finance in a press release.

She added that the proposals are also “a response to the debates emerging in the public space on the change in the amount of excise duty on alcoholic beverages and tobacco products”.

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Therefore – as the ministry explained – from January 1, 2022, the excise duty rates for ethyl alcohol, beer, wine, fermented beverages and intermediate products will be increased by 10 percent; the minimum rate of excise duty on cigarettes from the current 100 percent. up to 105 percent the total amount of excise duty and excise duty rates for innovative products by increasing the quota rate by 100 percent. It added that a minimum excise duty rate for smoking tobacco in the amount of 100% will also be introduced. of the total amount of excise duty and that the increase will not apply to cider and perry with an alcohol content of up to 5 percent.

The Ministry of Finance explained that the schedule provides for 5 percent every year. excise tax increases on ethyl alcohol, beer, wine, fermented beverages and intermediate products (but without cider and perry) and 10 percent. increases in excise duty on cigarettes, smoking tobacco and innovative products (heated tobacco – ed.). The Ministry of Finance stressed that “the assumed growth is similar to the increases adopted in other countries”.

“Heated tobacco taxes 19 out of 26 EU countries. Poland has the lowest tax rate among them. This is the result of significant increases in excise duty on this type of stimulants in recent years in other EU countries. An example is Germany, where the excise tax rate increased ninefold in the last year. “- we read.

The ministry emphasized that the rates for alcoholic beverages were also set at a similar level as in other EU countries.

Increase in the prices of alcohol and cigarettes

The communication explains that in 2022, compared to 2021, the difference in the taxation of a half-liter bottle of vodka was 40%. it’s about PLN 1.50; bottles of wine (0.75l) are about PLN 0.16; a half-liter can of beer is about 6 gr; a pack of cigarettes is approx. PLN 0.30, and heated tobacco is approx. PLN 1.

“According to Eurostat data, consumer prices of alcoholic beverages in Poland are much lower than in other EU countries. Cheaper alcohol can only be bought in Bulgaria, Romania and Hungary. The price of a pack of cigarettes is lower only in Bulgaria” – wrote the ministry.


The detrimental effect on health is the cause of the increases in excise duty on alcohol and cigarettes

As the Ministry of Finance explained, the increase is to counteract the harmful effects of alcohol and cigarettes on health, and therefore it is proposed to gradually increase the excise tax on them.

According to the Ministry of Finance, according to the World Health Organization (WHO), tobacco and alcohol are the main risk factors for the health of Europeans: smoking kills over 8 million people a year, of which as many as 1.2 million are the so-called Passive smokers, and tobacco addiction entails enormous economic costs estimated at 1.4 trillion dollars, or approx. 1.8 percent. world GDP.

As we read in the ministry’s announcement, smoking in Poland, with the number of approx. 67 thousand. cases per year, remains one of the leading causes of death. Informs that according to World Bank estimates that in Poland the cost of treating diseases caused by tobacco smoke is 15 percent. total medical expenses.

As MF estimates, the costs of consuming alcohol are equally high. “Every year 3 million people die from this worldwide, and harmful alcohol consumption contributes to 5.1 percent of diseases. This means that more than one in twenty patients suffer from causes related to alcohol consumption” – reads the release. According to the Ministry, according to the calculations of the State Agency for Solving Alcohol Problems (PARPA), the socio-economic costs associated with alcohol consumption in Poland amount to a total of PLN 30.9 billion per year.

According to the ministry, according to reports by WHO and the Organization for Economic Co-operation and Development (OECD), the recommended way to counteract the increasing availability of stimulants is “active tax policy, including raising excise duty rates”. It was added that the effectiveness of tax changes as a tool to limit access to stimulants was confirmed by the research of the National Institute of Public Health.

“The draft law also provides for the introduction of the ‘Excise Map’ postulated by the market, i.e. the schedule of changes in the excise duty rates planned for the next 5 years (until 2027). The Excise Map is a solution introduced in recent years by many European Union countries, incl. It was very well received by producers and distributors of excise goods operating in these countries, as it allows them to prepare in advance for changes in the law and effectively shape their pricing policy “- reads the release.

The Ministry of Finance also informed that public consultations on the draft act increasing the excise duty rate on cigarettes and alcohol were taking place from 8 to 15 October. “You can submit your opinions and comments to the address sekretariat.pa@mf.gov.pl” – said.

Main photo source: Shutterstock

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