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Δευτέρα, 20 Μαρτίου 2017 23:23

Higher taxes on tobacco products sink overall tax revenue from sector

Effects of a "tax tsumani" on tobacco products reportedly had the opposite result than the one desired, with the first figures of the year showing a dramatic decrease in related revenue for state coffers by 22 percent.

Effects of a "tax tsumani" on tobacco products reportedly had the opposite result than the one desired, with the first figures of the year showing a dramatic decrease in related revenue for state coffers by 22 percent.

In absolute terms, the reduction translates into a figure of 92 million euros in less revenues, compared with the corresponding two-month period of 2016.

Market analysts and economic survey organizations were essentially proved right in their forecasts, namely, that yet another tax hike on tobacco products would not only fail to generate more revenue but would, in fact, sink proceeds. The tax "raid" imposed in 2016 by the leftist Greek government in order to meet memorandum-mandated fiscal targets caused prices to increase by 40 to 50 cents per cigarette pack, and 50 cents for a 30-gram packet of tobacco.

Legally distributed and sold tobacco products posted a significant decrease in volume.

Sources told "N" that a special consumer tax on tobacco generated 220 million euros in January 2017, along with 67 million euros in VAT remittances, for a total of 287 million euros. February 2017, however, recorded a collapse in the numbers, with only 34 million euros generated from the special tax and a mere eight million euros in VAT remittances -- 42 million euros in total.