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Romania Might Further Hike Vice Tax – World Bank

The vice tax, especially the one applied for tobacco products, might be further increased in Romania, given that other European states have higher taxes per cigarettes compared with Romania, the World Bank stated in a report.
Romania Might Further Hike Vice Tax - World Bank
05 mart. 2009, 14:18, English

In Romania, the vice tax represents around 53% of the cigarettes’ retail price, compared with 60% in Bulgaria, 62% in Germany or 68% in France, the international instituion stated in a report drawn up for the Romanian authorities and obtained by MEDIAFAX.

According to World Bank experts, about 21% of Romanian adults smoke daily and a higher excise on tobacco would be the strongest instrument to reduce smoking, the mortality caused by smoking-related diseases and the health costs associated with this vice.

The vice tax was introduced in 2006 and set up at EUR0.2for each pack of cigarettes and at EUR200 for each hectoliter of refined alcohol, in order to fight against the excessive tobacco and alcohol consumption.

The money collected from the vice tax is used by the Health Ministry and invested in the infrastructure of the public healthcare system and in financing national healthcare programs.

In 2006, the Health Ministry cashed 645 million lei (EUR1=RON4.2785) from the vice tax, and revenues increased to RON1.3 billion in the next year.

According to the Fiscal Code, the total excise for 1,000 cigarettes, valid since July 1, 2008, is of EUR50, its value being estimated to increase at EUR61.2 as of July 1, 2009 and at EUR74 on July 1, 2010. The excise includes the vice tax worth EUR10.

Mid-February, Romania’s Finance Minister Gheorghe Pogea said the tobacco excise will increase by EUR14 in 2009.

In January, the Government decided to outgo the calendar agreed with the European Union on the tobacco and alcohol excises and to bring this year the taxes at the level scheduled for 2010.