Tuesday 24 November 2009

Subsided whether "smokescreen"?

International experts suggest that Ukraine once again to raise excise taxes on cigarettes ...
The prevalence of smoking in our country one of the highest in the world: two-thirds of men smoke (67%) and one in five women (20%). Such figures in its report entitled "Economics of taxation of tobacco products in Ukraine has recently voiced by the World Bank, revealing a detailed picture of the development of this market during the years of independence of our country. Results within Ukraine, experts of the World Bank counted as many as 16.5 million smokers, who spend on cigarettes 2.9% of their income. The scale of the disaster shows tobacco cigarette consumption figure for 2007: the Ukrainians have bought 123 billion cigarettes, while having spent 12.9 billion hryvnia (equal to 2% of GDP). We passed on this indicator almost all the countries of Eastern Europe. Leave the "smoke" the competition with the Ukrainian smokers could only Russians.
Smoking should immediately declare war, convinces the head of the National Board of Health, Advisor to the President Mykola Polishchuk. Otherwise, a few years we get a nation of drunkards and smokers. To say that makes the latest data, recently obtained from a survey of schoolchildren Kharkiv. It was found that one in five students smokes. Alcoholic drinks in a month consumes 45,8% of girls and 52,2% boys. "That is, 50% of pupils during the month to go to school drunk. Think, every day drunken 5% of boys and 2% of girls! "- Said Polishchuk. It would seem, what have alcohol to smoking? However, it is alcohol Polishchuk calls a direct consequence of early tobacco use. "Those who smoke have a tendency to use alcohol to six times greater than those who did not smoke."
Specialists of the World Bank is also an emphasis on the aspect of the nation's health when considering the rapid spread of smoking. Having analyzed the situation, they came to the conclusion that tobacco invasion began because of too low excise taxes on these goods. According to the Director of the Department of Strategic Studies on Tobacco Control of the American Cancer Community Hana Zrubovoy-Ross, from 2000 to 2006, cigarettes were too cheap. Prices are declining faster than prices, such as bread. During this period the real value of Ukrainian cigarettes fell by 26.2% despite the fact that inflation was no more than per cent. All this together led to active development of the market of tobacco products.
Officials in turn, report that, say, the first in May 2009 there was a doubling of the excise tax on tobacco products. Now the minimum excise tax, which provides the cost of one pack of cigarettes increased by UAH 1 20 kopecks (two and a half times). Filter cigarettes went up by 30%, and without filter - up to 50%. Consequently, the gap between expensive and cheap cigarettes reduced, as is customary in European countries.
The report's authors favor such steps, but offer the Ukrainian government will not rest on our laurels and to increase the rate of taxation for tobacco products to 70% of retail price. This will reduce the number of smokers by 1-2 million and have revenues in the range of 5.8 to 7 billion hryvnia.
This supports the idea of people's deputy, the deputy head of the Verkhovna Rada Committee on Budget Oleg Lyashko (BYuT). According to him, until September 2009, the committee will assess the situation with the increase of smuggling (which warn producers) and, if not confirmed this fact again will initiate the raising of excise taxes on tobacco products. "Today we are the only country in the world, which has a very interesting base of taxation for tobacco products: it involves an ad valorem rate, which takes into account the excise tax, but does not include VAT ... Due to exemptions from VAT tax base budget would wipe this year about 800 million hryvnia," - he says .
His support and advisor to the First Vice-Prime Minister Vladimir Ryaboshlyk, which indicates that the European norms in the cost of cigarette excise tax is 57%. In Ukraine, it increased to 42%, therefore, left to raise just a little. In view Ryaboshlyka, because of cheap cigarettes in the past years have seen a doubling of the market for their production. Ukraine actually become a "smoke of the Tiger" (an analogy with the steel market in China, which is also dubbed "tiger"). Instead, the current rate increase is not as scary as it painted tobacco magnates, added Adviser. According to his estimates, in 2009 the market cigarette production decreased by 5%. "For every 10% rise in price by about 2% decreases consumption of tobacco products" - sums up Ryaboshlyk.
"Given the same as that for the past seven years, tobacco companies have increased their production by half, even in the worst scenario, they just go back to that level of production, which was a few years ago", - convinced the head of department for tobacco control of the Ukrainian Institute for Strategic Studies, Ministry of Health Ukraine Konstantin Krasovskii.
For smokers, the recent tax innovations are as follows: "Winston" has risen in price up to 5.9 hryvnia (in Russia, a similar mark is 6.1 hryvnia), "Marlboro" - up to 6.5 hryvnia (in Russia respectively - 9 hryvnia), "Parliament" - up to 10,5 UAH (in Russia - 12,4 UAH). These data give a clear answer to those who are afraid of Ukrainians influx of contraband from Russia and Moldova, said Krasovskii. The price difference between brands of cigarettes have already referred to the European and Ukrainian production decreased considerably. Therefore, the risk at the border, no one will. Another thing, smuggling from the country. "We now have data that smuggling is from Ukraine on a larger scale than before the adoption of the law in September 2008 (the first stage of raising excise taxes on tobacco. - Auth.). It is tempting to think that tobacco companies are trying to earn some money "- sure Lyashko.
I agree with him and Krasovskii, who told The Day, falls as counterfeit tobacco abroad. "In the past year in Ukraine legally sold 125 billion cigarettes. Production was 130 billion. Exports - $ 10 billion, imports - $ 4 billion. Moreover, consumption is estimated tobacco companies in the country amounts to 80 billion cigarettes. Obtain a difference of about $ 40 billion, which constitutes trafficking in the EU ", - says Krasovskii. The expert said that the smuggled, sometimes reaching huge size: up to 200 thousand packs. This large number can not be purchased in the supermarket, but only at a large firm, licensed for the wholesale sale of tobacco products. The license is for a given activity is worth 500 thousand hryvnia per year. That is disadvantageous to register a fictitious company for the sake of a smuggling campaign. Licensing costs are too large.

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