Poland has submitted a request to have a transit period on the implementation of EU excise duty quotas on cigarettes. The EU currently has a minimum 57 percent excise duty on the price of the most popular brands whilst in Poland this is 52 percent.
The EU wants to introduce a minimum excise duty of EUR60 per 1,000 sticks, increasing to EUR64 by 2004. The object of this is an attempt to unify prices. In Spain excise duty is EUR51 per thousand sticks whereas in the UK it is EUR222 and as a result it is estimated that around one quarter of all cigarettes smoked there were bought in other EU countries.
Andrzej Raczko, the deputy finance minister responsible for EU talks, believes that Poland needs a transit period to 2008 to meet this directive. He believes that prices could double in this period.
Last year was not good for the domestic tobacco industry with increased competition, excise duty and smuggling and declining sales.
The Czech Republic and Hungary have agreed to implement EU conditions by 2006 whereas Lithuania has accepted 2010. In Lithuania it is believed that the price of cigarettes could increase four times.
If Brussels agrees to the Polish suggestion it will mean closing the chapter on taxation.