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posted 8 years ago
Excise is a form of state tax (duty) on certain products of mass demand
(excisable goods), which is levied on manufacturers or sellers of goods. Excise
is included in the price of good and paid by the consumer. The sum of excise
goes to state or local budget.
Excisable products
According to Article 215.1. of the Tax Code of
Ukraine, excisable products are:
•
ethyl alcohol and
other alcoholic distillates, alcoholic drinks, beer;
•
tobacco products,
tobacco and manufactured tobacco substitutes;
•
fuel;
•
cars, car bodyworks,
trailers and semi-trailers, motorcycles, vehicles for transporting 10 or more
persons, vehicles for transporting goods;
•
electric energy.
The rate of excise duty these products is defined in the
Tax Code of Ukraine, but it’s not constant and is reviewed annually.
The increase of the excise duty in 2017
On the 20th of December, 2016 the Verkhovna
Rada of Ukraine adopted the Law (registration number of the bill – №5132 from
09.15.2016) «On Amendments to the Tax Code of Ukraine on balancing budget
revenues in 2017». The law provides the increase in excise duty rates on
tobacco and alcohol, as well as on certain types of fuel. This law was adopted
in order to balance budget revenues as part of the annual revision of tax
rates. In addition, there will be growth in the minimum wage to 3200 UAH.
Therefore it was necessary to change some of the provisions of the Tax Code
that are bound to the minimum wage.
«The increase in excise rates will balance the revenue
part of the budget and adapt it to the European law» – is stated in an explanatory note to the bill.
In accordance with the Law, the excise duty on alcohol
and alcoholic beverages increases by 20%, on fortified and sparkling wines by
12%. Rate on dry wines remains unchanged, and on tobacco products increases by
40%.
The increase of price for excisable products
Prices for tobacco and alcohol products increase annually
in Ukraine. Increasing of excise duty is one of the effective ways to replenish
the state budget and reduce consumption of these products.
From the 1st of January, 2017 tax rate for 100% alcohol is 126,96 UAH/liter, for beer – 2,98
UAH/liter, for fortified wines and vermouth – 8,02 UAH/liter, for sparkling
wines – 11,65 UAH/liter.
Experts state that because of increase of excise duty
each bottle of vodka will cost at least 5 UAH more. In addition, producers will
raise the price themselves. Therefore, vodka will be about 10 UAH more
expensive next year.
As for tobacco products, the excise duty for 1000
filter cigarettes will be 413 UAH, as opposed to the previous duty of 318 UAH.
Manufacturers say that in this case, the retail price of one pack of filtered
cigarettes will grow up to 5 UAH. That means the price for cheap brands of
cigarettes will rise up to 20 UAH per pack, and the «premium» cigarettes will cost up to 50 UAH.
In its turn the Ministry of Finance is considering the
possibility of more serious increase in excise duties on cigarettes. It refers
to the Association Agreement with the EU, according to which Ukraine has to
increase the excise duty to the European level of 90 euro per 1000 pieces.
The impact of raising excise duty
The consequence of new increase in excise duties will be
a rise in prices. Nevertheless, it should not exclude black market and contraband
products growth. There is also a possibility that the producers of cigarettes
and alcohol will try to reduce the cost of production by decreasing its
quality. This increase in black market will cause a decrease in the state
budget.
After the adoption of the Law «On Amendments to the
Tax Code of Ukraine on balancing budget revenue in 2017», the Ministry of
Finance is discussing a further increase in the excise duty rate on tobacco and
alcohol products in 2017.
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