TIRANA, Feb. 16 – Rising cigarette prices due to continuous hikes in customs duties levied on tobacco in an effort to curb widespread smoking and smoking-related diseases has sharply curbed tobacco imports in Albania which in 2014 hit a record low for the past decade.
Data published by the country’s customs administration shows tobacco imports in 2014 hit a record low of 2,976 tonnes, down 20 percent compared to 2013, and one-third less compared to peak level of 4,500 tonnes in 2010.
Unaffordable prices for most smokers have considerably curbed tobacco imports in Albania which meet around two-thirds of the country’s needs, with a rising number of smokers shifting to cheaper domestic hand-rolled tobacco, most of which is traded informally, traders say.
Detailed data from the customs administration shows tobacco companies sharply increased their imports in October-November 2014, when they imported around a quarter of the annual imports, ahead of a new 20 lek (Euro 0.14) hike in customs duty starting January 2015.
Two months before a new hike in tobacco excise rate entered into force, cigarette prices in Albania underwent the usual price increase ahead of such news while no measures were taken to curb the speculation estimated to have brought tobacco importers and traders huge profits. Prices on most popular cigarette brands rose by 20 to 30 lek per packed (Euro 0.14 to Euro 0.21) in December 2014 abusively preceding the expected price increase starting January 2015.
Starting this year, the excise duty on 20-cigarette packs has increased by another 20 lek (Euro 0.14), taking the total excise rate to 110 lek (Euro 0.77) per packet. The Finance Ministry says that under an EU directive the minimum excise rate on cigarettes should be at 57 percent of the retail prices, compared to the current 34 percent in Albania.
“Excise rates on tobacco will gradually increase until 2017 to reach the minimum rate of excise duty in EU countries. We believe the curb of the smoking rate will have a direct impact on improving health care and a social and economic impact,” Health Minister Ilir Beqaj has earlier said.
Recent amendments to the law banning smoking in enclosed public spaces have considerably tightened penalties on violators and the implementation of the law seems back on track after it was massively ignored since its entry into force in May 2007.
The turnover of the cigarette market in Albania is estimated at Euro 300 million per year, of which 70 percent goes in excise, VAT and customs duties, says the Competition Authority whose probe in 2014 failed to find a banned deal among tobacco distributors.
Cigarette prices in Albania for the most popular brands vary from 200 lek to 300 lek (Euro 1.4 to 2.1) per packet.
With a smoking rate of around 40 percent, one of Europe’s highest, Albanians are estimated to spend more than 300 million euros on tobacco products every year.
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.
Lack of domestic industry on cigarette manufacturing after the collapse of the communist regime in the early 1990s, failure of the agri-cultural policies and competition from imported cigarettes have led to a sharp decline of 3.7 times in the cultivation of tobacco during the 1998-2012, says Open Data research centre.
Agriculture Ministry data shows domestic tobacco production dropped from 7,400 tonnes in 1998 to 2,000 tonnes in 2012. Since 2007, when domestic tobacco cultivation reached its lowest level of only 900 tonnes, domestic production has been on an upward trend.
Because of lack of manufacturing industry, more than half of domestic tobacco is exported mainly to Kosovo.
