**Nicosia, Cyprus** – A significant proposed increase in European Union tobacco excise taxes has ignited strong opposition from kiosk owners across Cyprus, who warn of detrimental economic consequences and a potential surge in illicit trade. The proposed reforms, aimed at curbing smoking rates and reducing healthcare burdens, are poised to dramatically alter the price landscape of tobacco products, including cigarettes, rolling tobacco, and novel nicotine alternatives, prompting a robust defence of the legal market from the sector’s representatives.
The Association of Permanent Service Stores (Sykade), which represents kiosk owners and is affiliated with the Cyprus Chamber of Commerce and Industry, has voiced grave concerns regarding the potential fallout from the EU's ambitious plan to significantly hike tobacco taxes. These proposed levies are intended to be phased in, with the ultimate goal of reducing smoking prevalence to below five percent by 2040, a target that EU health officials believe could yield substantial savings in healthcare expenditure, estimated to be nearly €6 billion annually across the bloc. However, Sykade argues that such aggressive fiscal measures are fundamentally flawed and fail to account for the unique economic realities of Cyprus.
Industry officials are sounding the alarm that the proposed tax adjustments could lead to a stark increase in the retail price of tobacco products. A pack of cigarettes, currently retailing between €4.50 and €5.00, could see its price climb to between €7.00 and €7.50. Similarly, rolling tobacco, a popular alternative for many consumers, could experience an even more pronounced escalation, with current prices of around €7.00 potentially leaping to €13.00. Perhaps most significantly, the EU's proposal extends excise taxation to e-cigarettes, heated tobacco, and nicotine pouches for the first time, a move that could effectively double the prices of these emerging products.
Sykade contends that these substantial price hikes will inevitably damage the legitimate tobacco market and could inadvertently fuel the black market. "Each new increase in taxes inevitably leads to a loss of income, jobs and state revenue," stated a representative for the association, underscoring their central argument. They point to existing challenges with smuggling, 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 losses to the state from this illicit trade are already estimated to exceed €50 million, and kiosk owners fear the proposed tax increases will exacerbate this problem significantly.
"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 combat the EU's objectives, proposing the implementation of more stringent penalties for those involved in illegal tobacco trafficking and the modernisation of 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 convey their concerns directly. The association has also engaged in discussions with the customs department. The forthcoming dialogue is expected to centre on finding a balance between the EU's public health ambitions and the economic viability of legal businesses, as well as the potential for increased revenue for the state through more effective enforcement rather than punitive taxation. The outcome of these discussions will be crucial in shaping the future of tobacco sales and consumption in Cyprus.