In Ukraine, cigarette prices will sharply rise in the coming weeks. President Volodymyr Zelensky has signed a bill to significantly increase excise taxes. Once existing stockpiles run out and new cigarette batches hit the shelves, their prices will increase.
Source: OBOZREVATEL
Find out why and how cigarette prices in Ukraine will be recalculated, what to expect in the coming years, and how this will affect the budget in the full article.
What’s Happening with Cigarette Prices in Ukraine
Cigarettes in Ukraine had already been getting more expensive even before the changes were approved. In fact, cigarettes are among the fastest-growing in terms of price increases. For instance, in January 2024, a pack of mid-range filtered cigarettes cost an average of 82.34 UAH, while by January of this year, it was already 104.3 UAH. Excise taxes are steadily rising and will continue to do so.
However, these increases are not enough to meet the European Union directive and bring the excise tax to the minimum EU level of 90 euros. For example, in Ukraine, a pack of Marlboro Gold costs 125 UAH, while in neighboring Poland, the same cigarettes are sold for 239.2 UAH in equivalent value. To become an EU member, Ukraine must meet the requirements for the minimum excise tax rate.
To fulfill this requirement, the government bill № 11090 was adopted. The document was supposed to take effect starting January 1. However, the president did not sign it for nearly three months. The increase in excise taxes on cigarettes was demanded not only by the EU but also by the IMF. Signing the law on raising excise taxes on cigarettes is a condition for the revision of the credit program.
“The budget for 2025 anticipates a deficit (excluding grants) of 19.6 percent of GDP and remains the anchor of fiscal policy for this year. It includes additional revenues from the increase in excise taxes on tobacco products, and the implementation of this change in tax policy is a mandatory condition for the completion of the IMF program review,” stated the IMF on February 28, 2025.
У результаті президент підписав закон 24 березня 2025-го. Заступник голови комітету з питань фінансів, податкової та митної Politician Yaroslav Zheleznyak calculated: due to the delay in signing the bill, the budget lost just over 2 billion UAH. “This money is now completely lost,” Zheleznyak notes.
How Cigarettes Will Become More Expensive
First of all, there won’t be an immediate price increase. Commodity stocks will allow the price hike to be postponed for at least a few weeks. Everything that was produced and sold before the excise increase will be sold at the old price. Secondly, the most significant price increase is expected in 2025.
Amendments have already been made to the Tax Code. Until December 31, 2025, the excise (minimum tax liability) for 1000 pieces must be 78 euros. The excise (as per the directive condition) must be 60% of the pack’s value. Therefore, the minimum cost of filter cigarettes will be 117.78 UAH. Currently, domestic filter cigarettes cost an average of 96.79 UAH (according to State Statistics). Therefore, a pack should become at least 21 UAH more expensive. The price increase will not stop there.
Taking into account the current exchange rate of the euro to the dollar, as well as the forecast for the devaluation of the hryvnia from the IMF, the cheapest pack of cigarettes in the coming years will cost (according to OBOZ.UA calculations):
- In 2025 – 117.78 UAH;
- In 2026 – 141.98 UAH;
- In 2027 – 154.4 UAH;
- In 2028 – 167 UAH.
“In 2024, the minimum excise for 1000 pieces was 2517 UAH. Since the bill 11090 did not come into force on January 1, the current excise increase schedule remained in effect, and the minimum excise increased to 3020 UAH for 1000 pieces in 2025. Now, after the implementation of bill 11090, the minimum excise rate will be in euros, 78 euros for 1000 pieces. This is 3510 UAH. That’s an increase of 490 UAH. This is +9.8 UAH per pack! (UPD: actually even less, since the exchange rate for the calculation is taken as of 01.07.2024). With VAT, that’s +11.5 UAH per pack compared to the current excises. Or +22-24 UAH compared to 2024,” said senior economist Yuriy Haidai, quoted by the Center for Economic Strategy.
At the same time, People’s Deputy Yaroslav Zheleznyak claims that the price increase could reach 40 UAH per pack already this year. The more expensive the cigarettes, the more Ukrainians are considering quitting the harmful and costly habit. As shown by research from the “Life” NGO, when the average excise per pack was 6.08 UAH, the number of smokers was 6.7 million people (in 2015). Gradually, excises increased. As of 2019, the excise per pack rose to 19.6 UAH, while the number of smokers decreased to 5.56 million people. At the same time, excise revenues to the state budget significantly increased. Over this period, they grew from 22.1 billion UAH to 44.1 billion UAH per year.
In 2024, the Ukrainian state budget’s revenue from excises on tobacco products and liquids used in e-cigarettes amounted to 96.6 billion UAH, which is 20% more than in 2023 (80.3 billion UAH).
“It is necessary to ensure the increase of tobacco excises, which will lead to an immediate price increase of at least 10% – according to the World Bank, this allows reducing tobacco consumption by 4-8%. Currently, it is important to eliminate the 25% tax preference for so-called IQOS devices, which was created in the interests of the tobacco industry and promotes the growth of TVEN consumption among youth,” stated the “Life” NGO.
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