Smoking in Russia will soon be more expensive, as analysts say current plans for cigarette policy will cause the price of cigarettes to jump five times higher by 2018.
The average price of a pack of cigarettes would be about 145 rubles, experts from the International Tax and Investment Center said, Rossiiskaya Gazeta reported Wednesday.
According to these estimates, cigarettes would take about 12 percent of the average smoker’s daily expenses and as much as 28 percent of a poor person’s daily budget, compared to five and seven percent today, respectively.
Woman and man smoking cigarettes on street
The organization’s head, Daniel Witt, said experience from Bulgaria, Ireland, Poland and Romania shows proposed tax policies could pressure market volume to collapse from 369 billion cigarettes per day to 186 billion, while at the same time boosting illegal trade from 11 percent to 35 percent of the market.
The Finance Ministry last year said it was considering hiking tax rates to 3000 rubles ($100) per 1000 cigarettes by 2015 as part of plans that would seek to add 1.9 trillion rubles ($66.9 billion) to the federal budget over three years. The budget boost from the cigarette tax increase alone was estimated at an additional 100 billion rubles ($3.54 billion). The tax hike would represent a ten-fold increase over last year’s rates, making it similar to the average cigarette tax in European countries, which is 64 euros ($90) per 1000 cigarettes.
The Health and Social Development Ministry is considering a raft of other bills aimed at convincing Russians to give up smoking, including banning smoking on all public transportation by 2014 and eliminating smoking in cafes, bars and restaurants by 2015. Displaying cigarettes at stores and other points of sale could also be outlawed.
Many of the new regulations are making it tougher for tobacco companies to make an easy profit. Requirements to print health warnings on cigarette packages cost the industry $28 million to implement, and new regulations requiring warning images on packages by 2014 will take similar funds, executive director of the Council for Tobacco Industry Edward Vorontsov told Rossisskaya Gazeta. Tobacco opponents say the sum sounds large, but for large tobacco companies, the sum is actually insignificant.
Smoking has had a particularly damaging effect on Russia, which has the most smokers per capita in the world. A smoking rating of 40 percent of people, including 60 percent of men, drove the number of smoking-related deaths to 500 out of every 100,000 fatalities in 2010, Euromonitor reports.
The annual retail volume of cigarettes sold in Russia increased more than 30 percent from 1999 to 2009. But after a record high of 393.3 billion cigarettes sold in 2008, the number decreased nearly 3 percent, according to a report posted on the Tobacco Free Center web site, citing Euromonitor International.
Russia ratified the World Health Organization Convention on Tobacco Control that year and the cigarette market in 2009 shrank 5 percent and has continued to drop each year since.
Plans for city development through 2025 recently unveiled revealed new rules that would ban smoking in Moscow’s bars and cafes after comments last November from the Health Ministry saying levels of harmful substances in the air exceed the norm by 14 times in these public venues.
At least 100 nonsmoking restaurants and cafes have opened in Moscow and other cities since 2006. In 2010, the first and only nonsmoking bar, called Belka (Squirrel) opened in Moscow, and coffee giant Starbucks is one of the few businesses that has always been smoke free, with no indication that this policy hurts business.
