In the first nine months of 2010, according to the State Tax Administration, the Ukrainian budget received 9.5 billion hryvnias from tobacco excise duties. This is 3.3 billion more than in the same period in 2009. During the same period in 2008, before the substantial increase of state excise duties, the state only received 2.3 billion, reported the Coalition of NGOs “For smoke-free Ukraine.” This revenue growth was the result of three substantial increases of excise taxes, which took place in September 2008, May 2009 and July 2010.
“As we see, the policy of excise duty increases is very effective,” says Kostiantyn Krasovsky, head of the tobacco control department of the Ministry of Health’s Ukrainian Institute of Strategic Studies. “The budget revenue continues to grow and the number of smokers in Ukraine steadily decreases. Thus, the results of the largest study of smoking prevalence in the history of Ukraine — Global Survey of Adult Tobacco Use (GATS) – confirmed that the prevalence of daily smoking in Ukraine has significantly decreased in the last five years. In 2005 37.2 percent of people 15 and older smoked everyday, then in 2010 it was only 25.5 percent. During the survey, smokers were asked to show the pack of cigarettes they smoked. Moldovan and Russian packs were shown by only 1.5 percent of the respondents. This is the real level of cigarette smuggling into Ukraine and clear evidence that the increase of excise duties has not led to the onslaught of contraband cigarettes, with which the tobacco industry tried to intimidate us,” adds Krasovsky.
Let’s recall that the increase of budget revenues due to the higher excise duty rates is not the main purpose of tobacco taxation. In the WHO Framework Convention on Tobacco Control, ratified by Ukraine in 2006, it is noted that price measures are, first of all, effective and important means of reducing tobacco consumption by various groups, particularly the youth.
