The state smothers cigarettes

Because of new excises manufacture and consumption of the Ukrainian tobacco has decreased on 20 %
Yesterday the first results of the governmental decisions on increase in tax pressure at tobacco branch became known. According to branch association "Укртютюн", c the moment of coming into force of new rates of the excise on tobacco products in May of this year volumes of release of cigarettes the domestic enterprises have decreased on 21,5 %. Manufacturers say that consumers were reoriented on cheaper cigarettes and contraband. Deputies assert that Ukrainians began to smoke less. However the data of sociological researches testifies that it has not occurred.
According to association "Укртютюн", in May-September the volume of output of cigarettes in Ukraine has decreased on 21,5 % – to 47,03 млрд piece From the beginning of year in the country has been made 85,22 млрд piece of cigarettes against 98,77 млрд piece year before. We will notice that till May falling of the manufacture caused by crisis, did not exceed 2 %. According to the general director of association of Valentina Homenko, the tobacco companies have been compelled to reduce a volume of output because of the reduction in demand caused by a rise in price in connection with last increase of rates of the duty.
Since May, 1st the law accepted on March, 31st according to which адвалорная the duty component on tobacco products has grown from 16 % to 20 %, and specific – with 15,6 грн to 35 grn/1000 piece for cigarettes without the filter and with 37,5 грн to 60 grn/1000 piece for cigarettes with the filter has come into force. The specific rate from the beginning of next year should be indexed on a rate of inflation. In the summer the Ministry has suggested to raise адвалорную the rate once again – on 36 %.
One of authors of the law on rates of the duty operating now People's Deputy Oleg Ljashko (БЮТ) considers that negative dynamics of a volume of output of cigarettes testifies to decrease in their consumption. “Consumption reduction is correlated with manufacture falling. About any signs of increase in illegal sales speech does not go”, – the deputy is assured. He also considers that other purpose of the law – increase of incomes in the state budget is reached also. According to ГНАУ, from the beginning of year the volume of the duty from tobacco products has increased in comparison with last year in 2,6 times – to 5,7 млрд грн. “The sum of deductions, of course, is less, than we planned, but is insignificant”, – mister Ljashko speaks.
Manufacturers do not share this opinion. “Manufacture falling at level of 20 % is caused by sharp rise in prices for cigarettes because of excise increase in May. After May increase of excises of the price for a pack of cigarettes without the filter have been increased on 1,25-1,6 грн, by a pack of cigarettes with the filter – on 1,7-3 грн”, – the director for corporate questions “JTI-Украина” marks Dmitry Redko. As a result the Ukrainian consumers were switched to cheaper cigarettes illegally imported from Russia and Moldova, madam Homenko confirms. In informal conversations representatives of branch say that the situation reminds 2000-2001 when every third pack of cigarettes sold in Ukraine, was illicit more and more. Therefore the companies start to turn off programs on modernisation of manufacture and plan reduction of the staff.
Import of cigarettes from Russia and Moldova speaks that in these countries for manufacturers the best conditions, than in Ukraine are created. Gathering on a pack of the cheapest cigarettes (cost 1,6 грн before excise payment) in Ukraine makes 1,02 грн, in Russia in recalculation for grivnas – 0,42 грн, and in Moldova – 0,07 грн. On the cheapest cigarettes with the filter (3 грн) in Ukraine – 2 грн, in Russia – 0,83 грн, in Moldova – 0,17 грн. In association "Укртютюн" have told that have the data of the Ministry of Internal Affairs according to which for 8 months of current year in Ukraine illicit tobacco production on 1,82 million грн that in 26 times more, than for the similar period of last year has been detained.
However, the chief of the press-service of State customs Svetlana Sudak says that attempts of export of cigarettes from Ukraine more than import attempts. “If we also detained at import illegal import of cigarettes, basically the cheap. On the contrary, it from Ukraine production” was illegally taken out, – she marks. This results from the fact that the floor price of a pack of cigarettes in the European Union countries reaches 5 euros.
Meanwhile the data of sociological researches says that in preferences of the Ukrainian smokers there were serious changes. According to Institute of social and political psychology of Academy of pedagogical sciences of Ukraine, the number of smokers since 2004 only grows in Ukraine. Thus, according to spent by institute from September, 14 till September, 20th to interrogation, third of respondents have passed to cheaper, so, less qualitative cigarettes, 5-8 % – on production from neighbouring countries. Thus 57 % of respondents have declared that the further rise in prices for cigarettes can lead to that they will start to buy illegal production from which taxes are not paid.