In the period of five years, the consumption of cigarettes in B&H is reduced by more than 40%, according to the analysis of Macroeconomic Analysis Unit of the Indirect Taxation Authority of B&H. The introduction of specific excises in middle of 2009 and its continuing growth, brought the harmonization of excise policies with EU consumption reduction in the expected terms (4% – 8% annually).
Drop in consumption of taxed cigarettes has exceeded 12% already in 2012, and in 2013 even 20%. However, these trends cannot be considered as realistic, if the strong growth of the black market of cut tobacco in recent years is taken into account, since a huge increase in the consumption of cut tobacco by 700 % was recorded.
Erosion of the consumption of cigarettes above expected affected the revenue as well. In the first year of harmonization, excise taxes recorded an enormous increase in revenues, which began to slow down in 2012, while the excise revenues fell by 7.8 % in 2013.
Negative trends in the collection of revenue and a rapid decline in consumption of taxable cigarettes, with the growing consumption of cut tobacco, mainly unbranded, required a different approach towards the taxation of cut tobacco in B&H.
Instead of ad valorem excise of 42 % of retail prices with taxes included, a specific excise on cut tobacco was introduced from the 1st of August 2014. Continuation of the process of harmonization of excises on cigarettes with the minimum excise in EU will inevitably lead to an increase of the minimum excise on cigarettes.
With the introduction of specific excise on cut tobacco, the excise burden of 1 kg of cut tobacco from the 1st of August 2015 is tripled, and from an average of 25 BAM before, it was increased to 78 BAM / kg (39.90 EUR per 1 kg). By the decision of the Governing Board of ITA the excise tax on smoking tobacco was established in the 2015 in the amount of 80 BAM / kg (or 40.90 EUR for 1 kg).
(Source: akta.ba)
