Cigarette price hikes on the way in the new year

According to the decision published in the Official Gazette with the signature of AKP Chairman and President Recep Tayyip Erdoğan, the relative Special Consumption Tax (SCT) on cigarettes and tobacco products has been reduced from 63 percent to 57 percent, while the difference has been shifted to the fixed SCT. While the new system pushes up the prices of cheaper cigarettes, it has reduced the risk of high-rate price hikes on expensive cigarette brands.

With the decision, while the relative tax was lowered, the fixed tax per pack was increased from 1.1043 TL to 4.8058 TL, and the minimum fixed amount per pack was raised from 22.228 TL to 28.498 TL. With this change, the tax threshold price for 1 pack of cigarettes rose from 35.28 liras to 50 liras. Thus, the possibility of cigarettes priced below 50 liras being introduced to the market has also been reduced.

The 6-point reduction in the relative SCT lowered the amount of price hike that companies need to implement to reflect every 1 lira of cost increase in cigarette prices from 7.5 liras to 5.2 liras. Due to the fixed SCT, it was stated that there could be an average price hike of around 3.5 liras on cigarettes. However, companies will decide for themselves which amounts to increase for which cigarette groups, based on competition, the risk of illicit trade, and cost factors.

PRICE HIKES BETWEEN 2-5 TL EXPECTED IN THE NEW YEAR

It is stated that officials from the Ministry of Treasury and Finance, who met with companies before the regulation, gave the message that they were making this change as a necessity of the fight against inflation, and that in line with this message, companies would try to keep price hike rates at a minimum. Price hikes between 2-5 TL are expected for cigarette prices in the new year.

News Source: 12punto