The Czech government has approved a proposal to raise excise duty on tobacco products. According to local media, the price of a pack of cigarettes will rise by CZK 12 (€ 0.43) as of January 2007, leading to the biggest increase in cigarettes prices for the last few years.

As of January 2008, the Czech Republic must have the minimum tax rate on cigarettes in the EU, which is 57 per cent of the price for the final consumer and € 64 per 1,000 cigarettes. As of next year, excise tax should reach € 60 per 1,000 cigarettes, which is CZK 1.69 per cigarette and 57 per cent of the price for the final consumer with the current crown/euro rate. At present, excise tax on a pack worth CZK 44 is CZK 27.20.
The raise in excise duty has been required by the EU, but it is also one of the measures with which the finance ministry wanted to keep the state budget deficit at the proposed CZK 88 billion next year. According to estimates by the ministry and analysts, the hike would bring some CZK 10 billion to the state coffers. But other analysts doubt that expectations of higher budget revenues will materialise, since smokers may switch to the cheapest brands. (pi)