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Web magazine, 31 May 2013 15:00

Cigarette prices doubled in past decade

In April 2013, the price of cigarettes was twice as high as a decade ago, mainly as a result of tax increases. Currently, taxes account for nearly three quarters of the price of a packet of cigarettes.

Cigarette price developments and total consumer spending

Cigarette price developments and total consumer spending

Price increase cigarettes much higher than inflation

In the ten years between April 2003 and April 2013, cigarette prices have risen by just over 100 percent. Inflation over the same period was nearly 20 percent. Excise and VAT increases have made cigarettes much more expensive. Without these tax increases, cigarette prices would have been nearly 28 percent higher.

Substantial price increase in 2012

Over the last 12 months, cigarette prices have risen by 15 percent, mainly caused by excise increases in April 2012 and January 2013. The VAT rate was also raised in October 2012, from 19 to 21 percent.
As yet, April’s excise increase is not reflected in the price.  Because tobacco retailers first sell their old stocks before they start selling cigarettes for new prices, the effect of the excise increase is delayed and does not become manifest until two to five months later. 

Price composition packet of cigarettes, April 2013

Price composition packet of cigarettes, April 2013

Tax accounts for three quarters of price packet of cigarettes

Today, taxes account for nearly three quarters of the price of a packet of cigarettes. The price of a packet of 19 cigarettes is 6 euros, but the price excluding excise and VAT would be 1 euro and 58 cents.

Shag tobacco also much more expensive

The price of a packet of shag tobacco has risen even more rapidly over the past decade. The price of a packet was 115 percent higher in April 2013 than in April 2003. This is also mainly due to excise duty rates. Excise duty on cigars has not changed over the past ten years. Cigar prices have risen by 32 percent over the period April 2003-April 2013.

Cees van der Vlis

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