Tobacco taxes change, price rise expected in July of 2007

TIRANA, Dec. 29 – Under the recommendations of IMF and the UN for increasing the price of cigarettes, the Albanian Finance Ministry has raised a team of experts who recently approved a new higher tax for cigarettes that reaches the amount of 50 leks per pack. The old tax was 40 leks per pack. This change will be immediately reflected in the price of cigarettes which is expected to rise by 10 leks per pack in July of 2007. The tax has been increasing since 2005 and is expected to reach its maximum in 2009 by 75 leks per pack. Albanians are among the highest consumers of cigarettes with a special percentage of young and teenager users. The special tax applied on the so-called “damaging goods” applies to tobacco, alcohol, coffee and other goods whose consumption exceeds by far the rate of production. The demand for these goods is inelastic as they have few substitutes in the market. Tobacco is taxed separately under Albanian legislation which includes it under another list, that of health risky goods.