site.btaGERB Will Not Withdraw Bill Hiking Excise Duty on Heated Tobacco, Will Phase In Increase

Sofia, July 5 (BTA) - Contrary to Wednesday's demand of Prime Minister and GERB leader Boyko Borissov, his parliamentary group will not withdraw a bill increasing the excise duty on heated tobacco units.

"After discussing the matter with the Prime Minister last night and with our colleagues today, we arrived at a decision to keep the bill, but we acknowledge the disrupted communication on this draft legislation," GERB Floor Leader Tsvetan Tsvetanov admitted and apologized to VMRO. He was speaking at an extraordinary news briefing in Parliament after consultations with the power-sharing United Patriots.

"The excise duty on heated tobacco units will be increased, but this will most probably be done gradually, in several steps," he specified.

Tsvetanov explained that the practice of France will probably be adopted, where these tobacco products attract the highest excise duty: 70 per cent of the duty on conventional cigarettes. Parliamentary Budget Committee Chair Menda Stoyanova pointed out that the present level of excise duty on heated tobacco in this country is 26 per cent of the tax on conventional cigarettes.

On June 29, MPs of GERB and the United Patriots, led by Stoyanova, moved amendments to the Excise Duty and Tax Warehouses Act according to which, effective October 1, 2018, the excise duty on heated tobacco units is to be harmonized with the duty charged on conventional cigarettes. The tax will thus be increased from 0.93 leva to 3.54 leva per packet, and the price of a packet of HeatSticks will double, from 5.50 leva now to nearly 10 leva. Stoyanova argued that the excessively low excise duty on heated tobacco has cost the public purse some 15 million leva in lost revenue since the beginning of 2018, and unless the law is amended the loss will reach 30 million leva by the end of the year.

The rushed revisions immediately gave rise to suspicions of lobbyism in favour of conventional tobacco products manufacturers, upset by the ever growing popularity of their competitor's product. Only one type of heated tobacco units is now registered on the Bulgarian market: the IQOS system of Philip Morris, and its market share is 1.4 per cent.