Government of Hungary to introduce special tax on cigarettes

October 30, 2015

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At his weekly Thursday afternoon press conference, Minister Overseeing the Office of the Prime Minister János Lázár announced that the government intends to introduce an additional tax on the tobacco industry of HUF 4 (USD 0.013) per cigarette.

Minister Lázár explained that the government “would use every means to increase the burden on the tobacco industry in order to decrease smoking in Hungary”.  He said the additional revenue would help offset the HUF 23 billion budget shortfall arising from the European Commission finding that the supermarket inspection fee increased manyfold at the beginning of 2015 runs afoul of EU law.

Lázár also announced that the government was examining the employment policies of multinational companies, as well as how other EU member countries oblige supermarket chains to “assume a larger share of public costs”.   He said larger companies ought to employ more people, and there were grounds to reports that the government was considering introducing legislation to this effect.

The government of Hungary has a monopoly on the distribution and sale of tobacco products in the country.  Tobacco products may only be sold at so-called “National Tobacco Shops” franchises which, in turn, from March of this year are required to purchase all of their tobacco products from one government designated distributor.  The decision to take away the right to sell tobacco products from grocery stores and other retailers deprived them of an important source of revenue, and many have since gone out of business.

The nationalization of tobacco retailing also resulted in a dramatic increase in black market cigarette sales.