Law on cigarette duty tax in Albania changes again. Are smokers being helped?

Law on cigarette duty tax in Albania changes again. Are smokers being helped?

IBNA Special Report

Tirana, October 17, 2014/Independent Balkan News Agency

Law on cigarette duty tax is in Albania changes again, aiming at increasing not only charges, but also reducing the threshold of import, starting from January 2015. Based on the new law, the amount of the import of goods on which duty tax applies from the moment when the new approved law is decreed, until it takes effect, cannot be higher than 20% of the monthly average of the previous year.

With the changes that have been proposed, this level goes down from 20% to 15%. Based on the analyses which have been conducted by the ministry of Finance, imports are much higher when the percentage is high. With the reduction of this level, an attempt is made to put added imports in the period before the rise of duty tax under control, as this phenomenon brings economic damages to the state budget and also deforms competition in the market.

Majority MP, Ervin Koci says that “with this difference of 15%, we cannot have an impact on imports that will be made immediately after the publication of the law, but we’re able to restrict imports in the future changes”.

Meanwhile, a debate is taking place in parliamentary committees due to the fact that in Albania, the price of cigarettes is not yet decided based on packet, like it happens with EU member countries.

Socialist MP, Erjon Brace, head of the parliamentary committee for economy, expresses his concern: “Go to the bottom of it and oblige them to put the price on the stamp duty, in order to put an end to accusations”, said Mr. Brace.

How will figures change?

Based on the new government law, from January 1, 2015, duty tax on tobacco will be 5500 ALL (46 Euros) per 1000 cigarettes, as opposed to 4500 ALL per 1000 cigarettes under the current law. Interpreted in terms of a 20 cigarette pack, this means that it’s price will be 20 ALL higher. Thus, a pack which currently costs 270 ALL or 2 Euros, sees an increase of around 16 Euro cents.

Duty tax on tobacco will see a fresh increase on January 1, 2016. According to the bill, as of this date, duty tax per 1000 cigarettes will amount to 6000 ALL or 6 ALL per cigarette. There will also be a rise as of January 1, 2017, where duty tax will amount to 6500 ALL per 1000 cigarettes.

The abuse has started

While the rise of the duty tax is expected to take place in January, abuses with the price have already started.

In the majority of shops that sell cigarettes, the increase has amounted up to 30 ALL or 50% more than the increase that the government has decided to make in January.

A vendor in Tirana offers more details: “We have increased the price of cigarettes because companies are not willing to supply us. We are obliged to buy cigarettes from secondary suppliers. We demand companies to bring normal supplies like they used to do before, but they refuse”.

IBNA demanded official information from cigarette distributors, but this was not possible. Nevertheless, IBNA learned the truth why shops are not supplied with cigarettes. A sales manager of an international company of the production and distribution of cigarettes says: “We have not applied any price increases.  When we do this, we announce it on the media. The price increase only happens when the duty tax is increased by the state. What’s happening in the final months of this year is that vendors want to receive massive supplies in order to accumulate stocks, which can then sell them at a higher price in January. Under these circumstances, we’re obliged to offer a limited daily supply for shops in an attempt to stop the accumulation of stock by speculative vendors”.

On the other hand, importers too are not “angels”. Sources from Customs say that since summer, there have been massive imports of cigarettes. Distribution companies create stocks in order to increase profits. Socialist MP, Erion Brace admits this: “Since August, we heard about the increase of the  import of cigarettes, fully aware that the level of duty tax would not change until the end of the year”.

Mr. Brace also raises another concern which relates to the quality. “As far as quality is concerned, tobacco is not controlled by anyone, increasing the damage that it has on the health of consumers. As far as the fiscal point of view is concerned, I don’t know what the fiscal administration does”.

Health comes first, but…

Milva Ikonomi, vice minister of Health, says that one of the main objectives of the government program is the reduction of the illness and mortality of the population, where tobacco is one of the main factors. She says that the EU recommends for duty tax on retail sale to occupy around 57% of the price.

In Albania, from the observations made by the Public Health Institute, the number of those who smoke tobacco for the first time, which consist on teenagers, occupies around 11,5% of this population, which is a relatively high figure.

Under these circumstances, the measures that must be taken to reduce tobacco consumption in this population, must be well focused.

The citizens are skeptic on the measures of the state. Many people say that the price increase of cigarettes has no relation whatsoever with efforts to help smokers, given that no such program exists. They say that the only scope de facto is for the state to generate as many incomes as possible, although de jure, governments swear everyday that they do this to reduce smoking. Data indicates the contrary. Smoking in tobacco sees a constant rise and the main factors that encourage it are stress, unemployment, poverty and the influence that smokers have on people with fewer such problems. /ibna/