New Tobacco Tax Reform Suggested in Finland

cigarettes pack

In Finland the Confederation of Finnish Industries EK proposed a new taxation scheme which increases prices on cheap cigarettes the most.

Currently in country cigarettes are taxed according to the price per pack. The new scheme supposes to impose taxes according to the number of cigarettes per pack.

Mika Jokinen, EK tax expert, says that the current taxation system is too complicated and provides different treatment to different types of tobacco, therefore it is necessary to change it.

The tobacco industry estimates that the price of the cheapest cigarettes, costing €4.50 would increase by 60 cents while the price of expensive cigarettes brands, costing €5.50 would rise by 20 cents.

Lauri Mäkinen, the regional head of corporate and regulatory affairs for British American Tobacco, noted that tax exemption applied to cheap cigarettes at present days is quite large. Due to this, sales of cheap cigarettes have nearly tripled over the past five years.

In Finland decades ago was introduced taxation of alcohol. The major goal of it was to bring the state more tax revenues and reduce alcohol consumption. Experts say it is necessary to regulate tobacco the same way.

Director Pasi Holm of the Pellervo Economic Research PTT said that the new taxation system would help to increase state tax revenues and reduce consumption of tobacco in the country, maybe not significantly, but a little and also reduce the volume of cigarettes brought in by tourists.

This research institute estimated that, the suggested reform in tobacco taxation could give to the state additional 10 million euros every year. .

The Confederation of Finnish Industries EK wants the proposal to be discussed by the cabinet in its upcoming round of budget talks.

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