Tax increase now fixed

These cigarette brands will soon be more expensive

The increase in tobacco tax in April is causing cigarette prices to rise.

(Bild: DoraZett - stock.adobe.com)

It will soon be more expensive for smokers: the increase in tobacco tax in spring will cause cigarette prices to rise again. Manufacturers are making packs 20 to 30 cents more expensive, one brand is even increasing by 50 cents - the "Krone" has the details. There could even be a second price jump this year if the government raises tobacco tax to plug the budget gap.

Many tobacconists are experiencing a rush in spring, with numerous smokers wanting to secure their favorite brand in time for the price increase. British American Tobacco announced price increases to tobacconists several days ago.

First increases as early as March 3
The "Krone" asked the four major tobacco manufacturers. As early as March 3, there will be some higher prices in tobacconists' shops.

• Apart from the Lucky Strike brand, which will be 20 cents more expensive per pack and will cost 6.20 euros in future, BAT (British America Tabaco) is increasing the prices of Pall Mall, HB and Parisienne by 30 cents, which corresponds to around 4 to 5 percent.
• But it is not only the London-based group that is reacting to the forthcoming tax increase. Company spokesman Ralf-Wolfgang Lothert from cigarette manufacturer JTI (formerly: Austria Tabak) says that "a large part of the cigarette portfolio will be increased by 30 cents per 20-pack as of March 10". This affects the popular Camel brand (6.50 euros in future) and Benson & Hedges varieties, for example. A spokesperson left open whether Winston cigarettes will also be increased by 30 cents.

• The market leader Philip Morris will also see increases. In addition to tax increases, the costs of ongoing operations also have to be taken into account, a spokesman said. Marlboro will also be 30 cents more expensive from April 1 and will be available for 6.80 euros in future.

• L&M will see a larger price increase , also from April. The price of this brand will rise by 50 cents per pack to 6.50 euros. Background: The brand is particularly popular in Germany, the price difference between Austria and the neighboring country is relatively high, which is why many Germans travel across the border to Austria and stock up on the brand at a low price. In Austria, L&M only has a market share in the low single-digit percentage range. In the case of Chesterfield, the Group is still determining the increase, which could also be 30 cents.

The industry has sovereignty over the prices, the tobacconists pass them on with a fixed margin.

(Bild: Patrick Huber)

• The fourth major producer Imperial(Gauloises, West, John Player Special) did not provide the "Krone" with any information on possible price adjustments. However, the fact that the group is also following suit with a 30 cent increase for some of its brands is obvious from the experience of recent years.

We will be increasing the prices for a large part of our cigarette portfolio by 30 cents per 20-pack as of March 10. This is in anticipation of the tax increase on April 1, 2025, which is already planned in the Tobacco Tax Act.

JTI-Sprecher Ralf-Wolfgang Lothert

Government wants to recoup 50 million euros with higher tobacco tax
With the price increase in March and April, manufacturers are anticipating the automatic tobacco tax increase every year. In this way, the margin for the industry and tobacconists is to remain stable, despite rising taxes. The consolidation package that the FPÖ and ÖVP sent to Brussels in January also included an additional 50 million euros from tobacco tax. It would be possible to quickly implement an extra increase on April 1, but it would certainly be very ambitious.

An adjustment during the year is more likely. Producers could then react again and increase prices, as the costs would otherwise "stick" to manufacturers and tobacconists. Due to the high pressure to save money, a rather rapid increase is to be expected; if the increase only comes towards the end of the year, it may have to be even higher in order to generate the same revenue.

The following idea was recently discussed: The fixed tax contribution, which is incurred per 1000 cigarettes, is to increase as planned. However, there is also a share of the tax that depends on the sales price. However, unlike usual, this could be frozen instead of decreasing, which would then lead to a higher overall tax burden.

Ministry: increase should be economically viable
The Ministry of Finance states that such steps should not be taken unilaterally at the expense of consumers and tobacconists. There should be no "economically unacceptable" increase. Exactly how the change is structured is a matter for the future coalition. An excessive tax increase could backfire if car trunk imports increase and tax revenue is shifted abroad.

More than every tenth "Tschick" from abroad
Eleven percent of the "Tschick" smoked in this country come from abroad and are not taxed in Austria. This proportion is lower than it used to be, when it was over 15 percent. This is because cigarettes are no longer significantly cheaper in neighboring countries such as Hungary and the Czech Republic. If this changes, however, imports of cheaper tobacco products could increase again.