From March 1, the Croatian government will raise excise duties on tobacco products, meaning higher prices for cigarettes, tobacco or heated tobacco products or e-cigarettes, which have recently become an increasingly popular alternative to classic cigarettes.
The Ministry of Finance published its proposal for a regulation on excise duties on tobacco products late yesterday afternoon, according to which excise duties on all products covered by that regulation increase, reports Jutarnji list.
The increase in excise duties on cigarettes is no surprise, but it is interesting that the largest increase in the state tax will occur on heated tobacco products where excise duty increases from 800 to 1,400 Kuna per kilogram. This is an increase in excise duty by as much as 75 percent, and such a sudden jump in excise duty on a tobacco product has not been recorded in Croatia so far.
The secret may lie in the fact that existing players in the market, including the British BAT, which owns the Rovinj Tobacco Factory, demanded that excise duty be raised on heated tobacco, a market niche in which their competitors are much stronger in the Croatian market. For the last year and a half, BAT has been threatening to leave Croatia and move production to a country that will be much more favourable for their investments.
From the moment BAT announced its departure from Croatia, Prime Minister Andrej Plenković instructed Finance Minister Zdravko Marić to try to find a way for BAT, which took over the tobacco factory in Kanfanar, to remain in Croatia and thus save five hundred jobs.
Given that the proposal of the Ministry of Finance means a drastic increase in excise duties on heated tobacco, the Government has obviously decided to comply with BAT in order to preserve production in Kanfanar. The outcome around the Istrian factory will show whether this increase in excise duties, and thus the price of heated tobacco, is enough.
As of March 1, the excise tax on cigarettes is also rising, so far it was 370 Kuna, in the future it should be 400 Kuna.