TIRANA, Jan. 11 – Cigarette prices underwent a rather unjustified hike in the first days of this year when a higher excise duty became effective.
Prices on 20-cigarette packs have increased by an average of 20 lek (€0.15) in the past few days and now range from 220 lek (€164) to 320 lek (€2.4), an unaffordable amount to a considerable number of smokers who have either quit or shifted to cheaper domestic hand-rolled unprocessed tobacco which is mainly sold on the black market.
Starting January 1, 2018, the excise duty on a 20-cigarette pack has increased by 7 lek to 117 lek (€0.87) in an ongoing hike aimed at discouraging smoking and preventing smoking-related diseases in the country.
Together with the 20 percent value added tax, the hike is estimated at 8.4 lek, less than half the 20 lek increase reflected on retail sale prices.
As the threshold on the 20 percent VAT system extends on all businesses with an annual turnover of 2 million lek (about €15,000) starting next April, down from a current 5 million lek (€37,000), retail cigarette prices are expected to undergo another hike, the same as many other consumer products.
The Albanian government expects to collect an extra 1 billion lek (about €7.5 million) from the hike in the tobacco excise duty if the same trend in imports is preserved.
However, the consecutive hikes on excise duties have been reflected on a sharp cut in cigarette imports in the past few years with imports dropping by a third to about 2,900 metric tons in 2015, down from 4,500 metric tons in 2010, according to the finance ministry.
Tobacco importers say there has been a shift toward hand-rolled unprocessed tobacco which is mainly sold on the black market and mostly produced in the mountain areas in the northern region of Shkodra and the central Albanian region of Elbasan.
The Albanian government plans to increase the excise duty on 20-cigarette packs to 130 lek (€1) a packet by 2021 as part of its commitment to bring the total excise to 60 percent of the final price.
At about 48 percent of the sale price, Albania levies the region’s lowest excise duty on cigarettes although its average prices of €1.5 a packet are not the Western Balkan’s cheapest.
Albania smokers complain the quality of packaged cigarettes in Albania, all of which is imported, is not the same to regional countries, although the country has a National Tobacco Agency guaranteeing their quality.
Once a huge tobacco producer under communism with several local brands, Albania has had no tobacco manufacturing plants since more than a decade.
Albania is one of the countries with the highest smoking rates, at about 40 percent and some 3,300 people a year are estimated to die of smoking-related diseases.
A decade after the introduction of smoking ban, Albania has considerably cut smoking in public areas, but anecdotal evidence suggests the law banning smoking in enclosed public spaces is mostly enforced in downtown areas where the night hours often turn into smoking areas and largely ignored in suburban and rural areas.
