Ukrainians who smoke cigarettes or use tobacco heating devices are facing serious expenses. The President of Ukraine has signed bill №11090, which involves a gradual increase in excise taxes on tobacco products. This means that every year the prices of cigarettes and HTDs (heated tobacco products) will increase.
The law was supposed to come into effect from January 1, 2025, but due to the delay in signing, the state has already lost over 2 billion hryvnias in revenue. Nevertheless, the new excise rates will still be introduced, and they will affect every smoker.
How will the excise taxes increase?
The increase in taxes will affect both regular cigarettes and HTDs.
Increase in excise taxes on HTDs
- 2025 – +22.2% (70.40 euros per 1000 units)
- 2026 – +11.9% (70.80 euros)
- 2027 – +4.2% (71.14 euros)
- 2028 – +4.6% (72.00 euros)
Increase in excise taxes on cigarettes
- 2025 – +35.4% (78 euros per 1000 units)
- 2026 – +17.0% (82 euros)
- 2027 – +8.8% (86 euros)
- 2028 – +8.2% (90 euros)
Gap between HTDs and cigarettes is widening
Every year, regular cigarettes will become significantly more expensive than HTDs:
- 2025 – 10%
- 2026 – 14%
- 2027 – 17%
- 2028 – 20%
This could lead to some smokers switching to alternative tobacco heating devices as they will be less taxed.
How will this affect cigarette prices?
According to the Ukrainian MP Yaroslav Zhelezniak, after the introduction of a new excise tax, the cost of a pack of cigarettes will increase by approximately 40 hryvnias. This will be the largest price jump for tobacco products in recent years.
Why is this important?
The increase in excise taxes is part of Ukraine’s international obligations. As experts point out, raising taxes on tobacco is a requirement of the EU and international partners who insist on reducing smoking rates and increasing budget revenues.
However, the problem lies in the fact that businesses still do not have a clear basis for calculations, as there is uncertainty about the exact dates when the new rates will take effect. This creates chaos in the tobacco market.
What’s next?
- Smoking will become an even more expensive pleasure, especially for those who smoke regular cigarettes.
- There is expected a shift of some smokers to HTPs and electronic cigarettes.
- At the same time, an increase in the smuggling of cheap tobacco products is possible due to tax pressure.
Conclusion
The increase in excise taxes is one method to combat smoking, but will it be effective? High prices may encourage people to quit smoking, but they may also push them to seek illegal alternatives. In any case, starting from 2025, buying cigarettes at the old prices will no longer be possible.
