New Ukrainian tobacco taxes will improve health in the short term but must be strengthened
Statement of Smita Baruah, Executive Vice President of Global Tobacco Control, Campaign for Tobacco-Free Kids
Washington, D.C. – A new law revising the tax code for tobacco products signed this week by Ukrainian President Volodymyr Zelensky represents modest, short-term progress in increasing the price of tobacco products to improve the health of Ukrainians but must ultimately go much further to maximize the life-saving potential of tobacco taxes. Significantly increasing tobacco taxes and prices remains the most effective way to reduce tobacco use.
The tax rates on cigarettes will now be linked to euros, a positive change. However, the percentage increase in excise taxes is low, with rates only reaching the current minimum European Union tax level of €90 per 1,000 units by 2028. The new rates are not aggressive enough to significantly impact tobacco consumption.
Additionally, the law mandates significantly lower tax rates on heated tobacco products, which have seen rapid growth in Ukraine’s market and have not been proven to be less harmful than traditional cigarettes.
Interference from tobacco companies delayed the signing of this law, allowing the companies to avoid paying additional taxes for the first quarter of 2025. This delay resulted in over 2 billion Ukrainian hryvnias, or about $51 million, in lost revenue for the national budget.
These half-measures and delays mean Ukraine is neglecting a significant source of additional revenue that the country desperately needs, especially as global aid for its defense against Russian aggression declines.
According to an analysis by the Vienna Institute for International Economic Research, the weak tax increases will result in a resumption of tobacco consumption growth once consumers adjust to the new price levels and will generate substantially less revenue for the government.
The Campaign for Tobacco-Free Kids commends the public health advocates in Ukraine who are fighting tirelessly for the strongest possible measures to curb the country’s tobacco epidemic. We urge the Ukrainian government to act urgently to raise tobacco taxes even higher in the coming years and to increase taxes on heated tobacco products to match cigarette rates. Higher tobacco taxes are proven to generate revenue