From March 1st, the Croatian government will increase excise duties on tobacco products, which means higher prices for cigarettes, tobacco or heated tobacco products or e-cigarettes, which have recently become an increasingly popular alternative to classic cigarettes.
The Treasury Department published its proposal for a regulation on excise duties on tobacco products late yesterday afternoon, which would increase excise duties on all products covered by this regulation, reports the Jutarnji List.
The increase in excise taxes on cigarettes comes as no surprise, but it is interesting that the largest increase in the state tax is on heated tobacco products, with excise taxes rising from 800 to 1,400 kunas per kilogram. This is an increase in the excise tax of up to 75 percent, and such a sudden surge in the excise tax on a tobacco product has never been seen in Croatia.
The secret may lie in the fact that existing market players, including UK BVT, which owns the Rovinj tobacco factory, have called for the excise duty to be increased on heated tobacco, a niche where their competitors are much stronger in the Croatian market. Over the past year and a half, BAT has threatened to leave Croatia and move production to a country that will be much cheaper for their investments.
From the moment BAT announced its withdrawal from Croatia, Prime Minister Andrej Plenković instructed Finance Minister Zdravko Marić to find a way to allow BAT, which took over the tobacco factory in Kanfanar, to stay in Croatia and save five hundred jobs.
Given that the Treasury Department's proposal means a drastic increase in excise taxes on heated tobacco, the government has apparently decided to comply with BAT to keep Kanfanar production going. The result around the Istrian factory will show whether this increase in excise duties and thus the price of heated tobacco is sufficient.
From March 1st, the excise tax on cigarettes will also increase, up to now it was 370 kuna, in the future it should be 400 kuna.