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Hungary: Reactions to Steep Increases in Tobacco Taxes

After being taken to the Court of Justice of the European Union (CJEU) by the European Commission (EC) in 2019, for failing to apply the minimum required excise duty on cigarettes, Hungary has been incrementally increasing the local tobacco tax, making the products unaffordable to most locals.

Diane Caruana

August 17, 2021

A 2019 press release on the EC’s website had explained that Hungary was given until December 31st, 2017, to gradually increase the excise duty on cigarettes and reach the required minimum threshold by the EU. When this standard was still not met by 2019, a formal notice letter was sent to Hungary on January 24th 2019, followed by a reasoned opinion on June 6th. When these actions did not lead to compliance, the EC presented the matter to the CJEU.

To this effect, the country started increasing the tax incrementally. “From July 1, 2019, the tax is HUF 19,200 per 1,000 cigarettes plus 23.5% of the retail price, but at least HUF 32,200 per 1,000 cigarettes. The minimum excise tax on a pack of 20 cigarettes calculates as HUF 644, which compares to an average price of HUF 1,310 for a pack of Multifilter brand cigarettes, MTI noted,” explained a 2019 BBJ article.

The latest two increments were one of 7.3% in January 1st and an additional 4.8% on April 1st. “With these two latest increases, a pack of cigarettes now costs around HUF 1,700-1,800 (EUR 4.7 – 5) in Hungary. Or, approximately HUF 200-250 (EUR 0.56-0.69) more than at the end of last year. This means that someone who smokes one pack per day will spend roughly HUF 51-55,000 (EUR 142-153) per month for cigarettes, which amounts to about half of the current net minimum wage,” explained an article on Hungary Today.

The public’s reactions to the tax increments vary

According to the findings of joint research by Pulzus Inc. and economic news portal napi.hu, there are roughly 2.5 million smokers in Hungary, and their reactions to the tax increments vary. “23% of smokers claimed that this increased price was already too high, and would quit smoking. 10% said they would switch to the rolling of cigarettes. This is something the government foresaw too, as a result, it raised the price of fine-cut tobacco too although it had fulfilled EU regulations previously. 8% would switch to some kind of e-cigarettes, 22% however, insisted they wouldn’t quit smoking despite the hikes. 37% said they had previously looked for an alternative (rolling or e-cigarettes).”