ASPECTS OF TAXATION OF CIGARETTES IN THE EUROPEAN UNION

Abstract

Method of taxation of cigarettes in the European Union brings also many negative effects except stable budgetary income, it discourages from harmful consumption or it takes into account the social costs of smoking. Except value added tax also excise composed of part of specific tax and part of ad valorem tax is there imposed on cigarettes. This causes a significant multiplication distorting the market and impacting the consumers in the case of an increase in the costs of producers of cigarettes. The mechanism of calculation of taxes imposed on cigarettes also causes a creation of a duty to pay taxes on taxes. The significant fact is that indicators measuring these effects between 1995 and 2008 are growing or at least are not declining and neither probable future regulation of harmonization of the taxation of cigarettes in the European Union brings any reparation of the given situation. Taxation of cigarettes is not generally transparent, the rate of taxation is based on inconsistent bases and objectives that should be achieved and probably they are not the priority for many countries of the European Union.