Plans announced recently by Croatia's finance ministry to increase taxes on tobacco, coffee, and non-alcoholic beverages solely serve to patch holes in the government budget, which were caused by the government's failure to implement much-needed reforms, the taxpayers' association Lipa, which advocates lower taxes, said on Friday.
“The (planned) government regulations will increase the tax burden. However, the government has no plans to spend the income gained by higher taxes on improving the health sector, but rather for merely patching holes in its budget. Even though the ministry is referring to an EU directive (to justify the tax raise) we note that the EU has continually recommended that Croatia implements reforms in all segments of its public sector – and yet those recommendations are ignored to a large extent,” the association said in a press release.
The association added that introducing excise tax on e-cigarette liquids and heated tobacco products is a “very bad measure” that will discourage consumers from switching from traditional cigarettes to less harmful tobacco products.
“Excise taxes already account for more than 80 percent of the price of a cigarette pack, and excise revenues end up in the state budget, while (state-run) hospitals’ totad debt is still more than 9 billion kuna (€400 million), and have to deal with very bad working conditions,” Lipa said.
The association proposed that in order to maintain the same overall level of taxation, the state should instead lower excise taxes on fuel while increasing taxes on tobacco, as well as introduce special new taxes on sugar and coffee.
Tobacco prices are currently expected to go up, because the finance ministry has recently drafted regulation which includes increasing tobacco excise taxes by 40 kuna (€5.4) per a thousand cigarettes. The planned regulation will also introduce new excise taxes on all e-cigarette liquids as well as heated tobacco products.
The government last increased excise taxes on tobacco in 2018, after which the price of cigarettes went up by around 2 kuna (€0.3) per pack. A similar rise is expected after the new regulation is adopted.
Depending on the brand, the price of a single pack of cigarettes sold in retail is from €3.3 to €3.9, which is higher than in most other countries in Southeast Europe. However, Croatian prices are still considerably lower compared to most Western European countries, such as Ireland, where a single pack might cost €12.6, or France, where the average price of a pack is around €8.3.
(€1 = 7.44 kuna)
