JTI: Order “114 bis” Affects Legal Cigarette Market

Source from:  ACTmedia 08/08/2019

Most excises coming from cigarettes in less than a month will affect the legal market and will jeopardize additional incomes the government hopes to obtain, JTI shows in a press release.

“Order 114 bis burned down the legal cigarette market. JTI considers the draft order published on Tuesday, which provides excise increases for cigarettes in less than a month, will profoundly affect the legal market and will jeopardize the additional incomes the government hopes to obtain,” the mentioned source says.

According to JTI, an increase of over 10 euros in less than a year has not happened since 2010, when smuggling had reached over 36% and black market has become a topic discussed by CSAT.

Gilda Lazar, the director of Corporate Affairs & Communications, JTI Romania, showed that last summer, JTI suggested the inclusion of a mechanism ensuring the annual maintenance of 60% incidence, until reaching the threshold  of 115 euros/1,000, where the European requirement no longer applies, but the proposal was not taken into account.

JTI sent an official letter to the Ministry of Public Finance requesting the increase of excises as of January 1, not September 1, to have time to amend business plans and let the market absorb price increases without being oriented toward smuggling products.

The level of total excises for cigarettes increases from 483.74 lei/1,000 cigarettes to 503,97 lei/1,000 cigarettes, according to the order published by the Finance Ministry on Tuesday.

The increase of the tobacco excise duty was necessary for the harmonization of a European Directive, otherwise Romania risks triggering an infringement procedure, the Minister of Public Finance, Eugen Teodorovici, told a press conference on Tuesday adding that "he has no gift to levy taxes and duties."

"As concerns the tobacco excise, it has to do with notifications received from the European Commission cautioning against the initiation of an infringement for Romania for failing to harmonize or to update with the respective directive. The Ministry of Finance does not - and I have told you again and again - I do not have the gift to levy taxes and duties. As much as some would strive to pin OUG 114 on me, no matter how much some of them would like, when discussing specifically, I mean specifically, they have no arguments. I do not like duties and taxes and I will not increase either their number or their amount. No matter how many crazy people write on Facebook, no matter how many inept people you will come across and will tell all sorts of things about me, they have no arguments. Ask them for concrete arguments," said Eugen Teodorovici.

According to him, the notification came from the European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici.

The level of the total excise duty for cigarettes will be increased, starting with September 1, 2019, from 483.74 lei/1,000 cigarettes to 503.97 lei/1,000 cigarettes, according to the draft Ordinance for the regulation of fiscal-budgetary measures, published by the Ministry of Finance on Tuesday.  Enditem