Kiosk owners lambast proposed tobacco tax hike

Kiosk owners have warned the finance ministry that proposed increases in EU tobacco taxes could dramatically raise cigarette prices in Cyprus and boost smuggling from the north.

In a meeting with the customs department on Friday, the kiosk owner’s association (Sykade) said the EU’s planned excise hikes could push a pack of cigarettes from €4.50–€5.00 to €7.00–€7.50 and rolling tobacco from €7.00 to €13.00.

Sykade argued this would do irreparable damage to the legal market and consumer behaviour.

“Each new increase in taxes inevitably leads to a loss of income, jobs and state revenue,” the association remarked.

It underscored that 50 per cent of kiosk revenue comes from tobacco products and that higher prices will encourage smuggling, business closures and unemployment.

Sykade estimates 13 per cent of cigarettes and 53 per cent of rolling tobacco are already smuggled from the north, causing annual losses exceeding €50 million.

The association called for stricter penalties for illegal trade and the modernisation of customs controls at roadblocks.

The EU proposal also brings e-cigarettes, heated tobacco and nicotine pouches under excise taxation for the first time, doubling their prices.

EU ‘clean growth’ commissioner, Wopke Hoekstra, said the reform is intended to reduce smoking rates below five per cent by 2040 and could save nearly €6 billion in healthcare costs.

Sykade urged the government to seek an exemption, citing the island’s division and the difficulties in controlling smuggling.

“In this environment, imposing new increases in legal taxes will not reduce consumption, but will dramatically boost smuggling and deprive the state of further revenue,” it said.

Sykade further pointed to the approximate 600 kiosks have closed in the last decade, and existing controls are insufficient to tackle the current level of illegal tobacco trafficking.

“The illegal trade in tobacco products in Cyprus has reached alarming proportions,” it added.

Cyprus has one of Europe’s highest smoking rates, with around 34 per cent of adults smoking, including 46 per cent of men and 22 per cent of women.

Tobacco consumption is responsible for more than 600 deaths annually, while over 163,000 adults and 14,000 children aged 10 to 14 use tobacco daily.