Cheapest Cigarette Pack In Romania To Cost RON7.1 Next Year, From Current RON6.4

Gambaccini said during a seminar on the taxation of tobacco products that excises in Romania grow at too fast a pace and have already been hiked twice this year, in April and September.

Gambaccini said the excise system encourages the development of the black market, especially from neighboring countries where cigarettes are cheaper and Philip Morris expects an increase in sales of illegal cigarettes.

The average price of a cigarette pack is of EUR1.53 in Romania, but just EUR0.3 in the Republic of Moldova and EUR0.27 in Ukraine.

Gambaccini argued the increase in excises in several European states has neither increased revenues to national budgets nor has it encouraged people to stop smoking, instead it helped develop the black market.

Peter Imre, corporate affairs manager with Philip Morris Romania, said in turn that any price hike in cigarettes has an impact on inflation.

"The EUR1.6 billion paid in excises each year come from the family budgets of about seven million smokers. I think this money should be treated with more respect," Imre said.

He added Philip Morris does not rule out leaving the Romanian market if blackmarket sales escalate.

"Nothing forces a company to stay here if the government does nothing to help," Imre said.

Romania increased excises for cigarettes by EUR7, to EUR57 per 1,000 cigarettes as of April 1, and the tax was increased further to EUR64 per 1,000 cigarettes as of September 1. According to a government-approved calendar, cigarette excises will increase another EUR10 per 1,000 cigarettes starting next year, which large tobacco producers say will increase cigarette prices by an average RON1 per pack.

In Romania, Philip Morris International has a cigarette factory in Otopeni, near capital Bucharest, and exports its tobacco products mainly to EU countries such as Italy, Poland and the Czech Republic, but also to Africa.

British American Tobacco, Philip Morris International and Japan Tobacco International control over 95% of the Romanian cigarette and tobacco product market.

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