The Ministry of Finance expects an additional 100 billion rubles in the budget of 2023 due to a new approach to the regulation of the tobacco industry. But given the unclear timing of its introduction, the impact on budget revenues is limited.
In the draft federal budget submitted to the State Duma for 2023 and the planning period of 2024-2025, an additional income item appeared — "increasing the collection and improving the administration of excise taxes on tobacco products." The government expects that in 2023 budget revenues for it will amount to 100 billion rubles. — this will increase the total revenue from tobacco excise taxes to almost 751 billion rubles. The State Duma will consider the draft federal budget in the first reading on October 26.
The press service of the Ministry of Finance of RBC explained that additional tax revenues will be provided by the measures laid down in the draft law on state regulation of the tobacco industry developed by the ministry. The Ministry of Finance developed proposals to tighten regulation of production and turnover of products in the tobacco industry last year, and in June 2022, a draft industry law was submitted to the government.
What the Ministry of Finance offers
The Ministry of Finance believes that due to the presence of several regulators in the tobacco industry (it is supervised, in particular, by the Ministry of Agriculture, the Ministry of Health of Russia, the Ministry of Internal Affairs of Russia, Rospotrebnadzor, the Federal Tax Service of Russia and the Federal Customs Service of Russia), as well as disparate regulatory framework, there are almost no "effective control mechanisms" for the production and turnover of tobacco products on the market. This, in turn, leads to an increase in the illegal production and turnover of cigarettes and nicotine-containing products, according to the explanatory note to the bill. As a model of regulation, the Ministry proposes the use of an "established system of state regulation and control of the alcohol market."
The main requirements of the draft law prepared by the Ministry of Finance provide for obtaining licenses by turnover participants for the following activities: production, storage and supply of manufactured tobacco products, raw materials, nicotine-containing products and nicotine raw materials; wholesale of tobacco and nicotine-containing products, as well as their raw materials; production, storage and supply of manufactured cigars. You will not need to obtain a license for the retail sale of tobacco products.
Also, manufacturers will be required to register the main equipment for the production of tobacco products and raw materials. If it is not used, it must be preserved.
Accounting for the volume of production and turnover of products, according to the document, should be carried out using the state information system for monitoring the turnover of goods subject to mandatory marking by means of identification (the national marking system "Chestny Znak").
The document also provides for a ban on the sale of tobacco products not in consumer packaging and the mandatory availability of accompanying documents and marking when turnover of nicotine-containing products.
All the measures proposed by the bill, as specified in the press service of the Ministry, will allow to establish effective state control over the production and turnover of tobacco and nicotine-containing products and reduce the volume of the illegal market, thereby ensuring additional revenue to the budget in 2023-2025.
How many illegal cigarettes are there in Russia
The volume of illegal tobacco products in Russia was assessed by the National Scientific Center of Competencies in the Field of Combating Illicit Trafficking in Industrial Products (ANO "NCCR"). According to RBC's research data (conducted in the second and third quarters of 2022), illegal products now account for 12.1% of the Russian tobacco market. Most illegal cigarettes are found in the border regions — Novgorod and Bryansk regions: counterfeit there is 43.6 and 32.7% of the turnover.
The largest share in illegal turnover is cigarettes illegally imported from neighboring countries of the Eurasian Economic Union (in addition to Russia, it includes Armenia, Belarus, Kazakhstan and Kyrgyzstan). They account for 7.5% of the Russian tobacco market in 2022, and the share of this counterfeit is growing (in 2021 it was 6.7%). Most illegal cigarettes come from Belarus: They account for 92% of tobacco counterfeit imported to Russia from the EAEU countries, with Armenia in second place (with a share of 5.7%).
Among counterfeit packs, cigarettes from international manufacturers are most often found: 40% of them are Philip Morris brands (produces Marlboro, Parliament, Chesterfield, L&M, Bond Street, etc.). Another 28% of illegal packs are brands of Japan Tobacco International (produces cigarettes Winston, LD, Mevius, Camel, Sobranie, Kiss, "Peter I", etc.), 19% are brands of British American Tobacco (among its cigarettes are Dunhill, Kent, Vogue, Rothmans, Pall Mall, Lucky Strike and "Java").
Due to illicit tobacco trafficking, the federal budget lost at least 38.7 billion rubles in the first half of 2022, and for the whole of 2021, the amount of unpaid excise taxes, according to the estimates of ANO "NCCR", amounted to 75.2 billion rubles.
An analysis of the current system of excise taxes on tobacco products by the Accounting Chamber showed that due to the growth in sales of illegal products from 2016 to mid-2021, the federal budget missed 295.6 billion rubles.
Now the bill of the Ministry of Finance, according to Oleg Barvin, Director of the Department of Legal Affairs and Foreign Corporate Relations of British American Tobacco in Russia, is still under consideration by the government. RBC sent a request to the government's press service.
If the law comes into force, it will play a role in reducing illegal tobacco trafficking, especially thanks to new tools for controlling the movement of raw materials and equipment, Barvin admits. But, in his opinion, it is difficult to judge what revenues it can bring to the budget: "The amount of additional tax collections will depend on the speed of adoption of the bill and its entry into force, as well as on the effectiveness of the measures proposed in it," the top manager notes.
Given the unclear timing of the adoption of the law and the complexity of innovations for the industry, the impact of this measure on budget revenues in 2023 may be extremely limited, says Maxim Korolev, editor-in-chief of the Russian Tobacco industry agency.
Source:
rbc.ru