Will There Be Fewer Contraband Cigarettes?

The President has signed a law setting the excise duty rate on tobacco items at ten hryvnias per thousand pieces for filter cigarettes and seven hryvnias per thousand for non-filter cigarettes, Ukrayinski Novyny reports. This rate of duty will remain in force until July 1, 2000, according to a law adopted by Verkhovna Rada on November 19. Now the excise duty is 2.5 euro (UAH 11.78) per 1000 for both filter and non-filter cigarettes.

It became necessary to lower excise duties on tobacco items because of the increased supplies of contraband cigarettes from Russia and reduced Ukrainian cigarette output. However, according to Larysa Taniuk, deputy chair of the Ukrtiutiun (Ukrainian Tobacco) Association, the new excise duties on cigarettes are not optimal, for they do not allow Ukrainian factories to adequately compete with Russian contraband. Ukrtiutiun experts believe the excise duty rate should be set at five hryvnias per 1000. Ms. Taniuk also came out for a standardized rate: “The different excise rates could provoke factories to put priority on non-filter products.”