Cigarette prices in Hungary: towards alignment with European regulations?

In Hungary, the cigarette tax is currently not in line with European Union (EU) rules because it is not high enough.

In October 2020, the Hungarian government introduced a tax bill that will see excise duties on tobacco products increased twice in the coming months, significantly increasing the price of a pack of cigarettes.

An alignment planned for 2021

The government has just revealed the details of this measure in a draft tax law submitted to Parliament in mid-October 2020. According to this proposal, from January 1st to the end of March 2021, excise duty will be HUF 24,000 (€65) per thousand cigarettes, and from April, it will increase to HUF 26,000 (€71). This means that for a classic pack of about twenty cigarettes (one of the cheapest) which until now cost HUF 1,200 (around €3.3), the new price will be HUF 1,500 (€4.1) from January and HUF 1,650 (€4.5) from April.

A loss in value of the local currency against the euro

Although excise duties on tobacco products have been increased several times in recent years in Hungary and there was a period when Hungarian taxation met EU expectations, the forint has lost 15 % of its value against the euro in recent years, so that the price of tobacco products no longer meets EU regulations.

In addition to aligning with EU expectations regarding the taxation of tobacco products, this tax increase will also be beneficial for the overall state budget, particularly to compensate for the loss of revenue caused by the Covid-19 crisis.