On Monday a new report by the Foundation for Economic and Industrial Research (IOBE) warned that the new tax hike to be placed on tobacco products starting January 1, 2017 will actually cause a 100 million euro annual loss in state revenues.
The report stated that with the tax hike, consumers will be driven to purchase illegal tobacco trade products which will lead to an increase in tobacco smuggling. It is estimated that illegal trade of tobacco products will rise by some 5 percent in 2017 due to the tax hike, resulting in contraband cigarettes accounting for around 30 percent of tobacco consumption in Greece.
Despite the warnings from the IOBE, the Finance Ministry is going full-speed ahead with the tax hike on tobacco products hoping to bring in an additional 121.8 million euros in tax revenues.
In all, sources report that the consumption tax on cigarettes is planned to increase from 20 percent to 26 percent and on fine-cut tobacco taxes will rise from 156.7 euros per taxable unit to 170 euros. All increases will take place starting January 1, 2017.