Poland’s tobacco industry is bracing for significant changes as the government prepares to substantially increase excise taxes on tobacco products, with e-cigarette taxes set to rise by up to 75%, causing considerable upheaval within the industry.
According to a report from Fakt on July 10, the Polish Ministry of Finance and the Ministry of Health have signaled imminent adjustments to the excise taxes on tobacco products. The planned increases will be phased in over the next few years, with the goal of achieving new tax thresholds by 2025. Specifically, the tax on cigarettes is expected to rise by 25%, hand-rolled tobacco by 38%, innovative tobacco products by 50%, and e-cigarettes by a substantial 75%.
These impending changes have already sparked significant concern within the industry. Over the next three years, all tobacco products in Poland will experience corresponding excise tax hikes. By 2025, cigarettes could see a cumulative tax increase of up to 60%, hand-rolled tobacco up to 90%, innovative tobacco products up to 85%, and e-cigarettes up to 150%. It is estimated that the price of the cheapest pack of cigarettes could reach 20 PLN (approximately $5.09) by 2025. Furthermore, e-cigarettes are expected to face annual tax increases of 75%, 50%, and 25% from 2025 to 2027.
Łukasz Kozłowski, Chief Economist of the Polish Federation of Entrepreneurs, expressed his concerns on X (formerly Twitter) about the Ministry of Finance’s plans. He criticized the government for violating Article 11 of the coalition agreement, which mandates that any tax changes must be communicated at least six months in advance. Instead, the government has provided a much shorter notice period for these substantial tax hikes.
The Ministry of Finance believes that despite the tax increases, Polish consumers will not cease smoking. Instead, they anticipate a shift towards the grey market and smuggled products as smokers seek more affordable alternatives.
In conclusion, Poland’s proposed adjustments to tobacco taxes, particularly the significant hike in e-cigarette taxes, are set to reshape the tobacco industry landscape. These changes are likely to have wide-ranging implications, both economically and socially, as the government seeks to balance public health objectives with fiscal needs. Industry stakeholders and consumers alike will need to navigate this evolving regulatory environment in the coming years.
