SCT blow to cigarette prices: Major price hike coming

The Turkish Statistical Institute (TÜİK) will announce the June inflation data on Wednesday, July 3, at 10:00 AM. With this data, civil servant and retiree salary increases, the rent increase rate, and especially the Special Consumption Tax (SCT) rate to be applied to alcohol and tobacco products will become clear.

In particular, the 6-month Domestic Producer Price Index (PPI) data plays a decisive role in tax calculations for cigarettes and alcohol.

AT LEAST 8 TL HIKE FOR ALL CIGARETTE BRANDS

According to Habertürk columnist Rahim Ak, the new SCT amounts to be applied to cigarettes will be effective starting July 4. The tax increase, which will apply to all cigarette brands, means a hike of at least 8 TL per pack, and an average of 10 TL.

It is stated that this increase will be reflected directly in prices by the manufacturers. No brand will be exempt from the hike.

TAX BURDEN ON CIGARETTES APPROACHES 65 TL

The main factor determining the price of cigarettes is the tax structure. In the current situation:

Minimum specific tax applied per cigarette stick: 1.8313 TL

Minimum specific amount per pack (20 sticks): 36.62 TL

With a 15% increase, this amount will be: 42.11 TL

The specific tax will rise from 10.50 TL to 12.07 TL; in total, the SCT amount will be 54.12 TL

When VAT is added, the total tax burden will reach 64.94 TL

This means that approximately 75% of a cigarette pack consists solely of taxes.

2024 TAX REGULATIONS WERE THE PRECURSOR TO THE HIKE

With the Presidential Decree published in March 2024:

The specific tax was increased from 8.39 TL to 10.50 TL

The relative tax rate was reduced from 53.5% to 50%

With these regulations, increases in cigarette prices began to be reflected with a smaller multiplier effect. The financial multiplier was reduced from 7.5 to 3.8 in an attempt to mitigate the inflationary impact.