Any shift away from high-tax cigarettes to low- or no-tax heated products or e-cigarettes inevitably leads to lower collections of the excise tax, unless overall consumption or the tax rate rises. So it’s clear what the finance ministry means when it says that a change in con-
sumer purchasing preferences led to a Kč 2.3bn (6.9%) y/y decrease in tobacco-tax revenue in the first seven months. CEO Jacek Olczak of Philip Morris Int. was in Prague recently and praised the CR for its much lower tax on heated products, which allows for a higher profit margin. He told HN that his company will be able to halt production and sales of classic cigarettes within a very short time. Yet his European president, Massimo Andolina, boasted to FAZ about the importance to Ukraine of a new $30m factory near Lviv that is to open earlynext year. It is to produce 10bn classic cigarettes per year. Should the Czech state perhaps be proud that its tax policy for Iqos will help to fund production of Marlboros in Ukraine?

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