Kiosk owners in Cyprus are vehemently opposing a significant proposed increase in European Union tobacco excise taxes, expressing profound concerns about the potential negative economic repercussions. These proposed reforms, designed to reduce smoking rates and alleviate healthcare burdens across the bloc, are projected to substantially alter the pricing of various tobacco products. Representatives from the sector are mounting a robust defence of the legitimate market against these ambitious fiscal measures.
The Association of Permanent Service Stores (Sykade), an organisation representing kiosk owners and affiliated with the Cyprus Chamber of Commerce and Industry, has articulated serious apprehensions regarding the fallout from the EU's plan. The proposed levies, intended to be implemented gradually, aim to decrease smoking prevalence to below five percent by 2040. While EU health officials anticipate considerable annual savings in healthcare expenditure, estimated at nearly €6 billion, Sykade argues that these aggressive fiscal strategies are fundamentally flawed and disregard Cyprus's specific economic circumstances.
Industry officials are sounding an alarm that the impending tax adjustments could trigger a dramatic escalation in the retail price of tobacco products. A pack of cigarettes, currently priced between €4.50 and €5.00, might soon cost between €7.00 and €7.50. Rolling tobacco, a widely chosen alternative, could experience an even more pronounced price surge, potentially increasing from around €7.00 to €13.00. Crucially, the EU proposal extends excise taxation to e-cigarettes, heated tobacco, and nicotine pouches for the first time, a move that could effectively double the cost of these newer products.
Sykade contends that these substantial price increases will inevitably harm the legitimate tobacco market and could inadvertently stimulate the black market. "Each new increase in taxes inevitably leads to a loss of income, jobs and state revenue," a representative stated, highlighting their primary argument. They draw attention to existing smuggling challenges, particularly from the northern part of the island, which already accounts for an estimated 13 percent of cigarette consumption and a staggering 53 percent of rolling tobacco. Annual state losses from this illicit trade are already estimated to exceed €50 million, and kiosk owners fear the proposed tax increases will significantly worsen this situation.
"This isn’t just a number on a pack," the Sykade representative elaborated. "Such an increase could push more people toward illegal cigarettes, especially from the occupied territories, and hurt both consumers and the legal market." The association is advocating for alternative strategies to achieve the EU's objectives, proposing more stringent penalties for tobacco trafficking and modernised customs controls, including at roadblocks. They have also requested an exemption from the proposed tax hikes.
In response to the growing apprehension within the sector, Sykade has scheduled a meeting with the Finance Minister this week to directly convey their concerns. The association has also engaged in discussions with the customs department. The forthcoming dialogue is expected to focus on achieving a balance between the EU's public health goals and the economic viability of legal businesses. It will also explore the potential for increased state revenue through more effective enforcement rather than punitive taxation. The outcome of these discussions will be critical in shaping the future of tobacco sales and consumption in Cyprus.