Increase in excise duty on tobacco produced 151 million euros less than anticipated in 2016

Monday, 09 January 2017 14:35
The increase in tobacco excise duty has led to falls in Belgian tobacco sales, with customers seeking tobacco from cheaper markets. The increase in tobacco excise duty has led to falls in Belgian tobacco sales, with customers seeking tobacco from cheaper markets. © Belga
The increase in excise duty on tobacco produced 151 million euros less than anticipated in 2016, producers and importers of cigarettes in Belgium and Luxembourg note today (Monday).
They are quoting figures produced by the FPS Finance. Last year, the government indeed generated 3.238 billion euros in tax revenues from the sale of tobacco, but the net amount going to the state came to 3.087 million euros.

From this total, 2.351 billion amounted to excise duty and 736 million to VAT, whilst in 2015, tobacco receipts increased to 3.039 billion, of which 2,301 billion was excise duty and 738 million VAT, the FPS Finance details.

The sector federation Cimabel laments that of the additional 199 million euros expected by the government, “hardly 48 million euros were generated, not even a quarter of the amount expected.”

It illustrates that this amounts to the Treasury losing out by 4.78 euros every second, or 151 million euros across the year.

The Chairman of the federation for cigarette producers and importers Pierre Durinck, who also works for British American Tobacco, summarises, “With this drastic increase in excise duty, the government has produced the reverse effect.”

Belgian consumers are seeking less expensive alternatives, either on the black market or abroad, essentially in Luxembourg and within the countries of southern and eastern Europe.

Cross-border sales with France, the Netherlands and the United Kingdom are also in free fall, Cimabel adds.

Without any form of intervention, the 2017 budget deficit will be even greater, warns the sectoral federation.

At the same time, the government are banking upon tobacco industry fiscal receipts of 3.349 billion euros this year, or 262 million euros more than the actual 2016 receipts.

Tobacco companies, who are calling upon competent ministers to urgently engage with stakeholders, say the budget deficit may amount to some 400 million euros.

Lars Andersen
The Brussels Times
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