Moldovan manufacturers are in favor of differentiated taxation of domestic and imported tobacco products.
Representatives of local tobacco enterprises made this statement for the newspaper Ekonomicheskoye Obozreniye Logos-Press (Экономическое обозрение Logos-Press) in the context of the development of a new type of tobacco product - cigarillos (small cigars weighing up to 3 grams) and the situation in the tobacco market as a whole. According to the newspaper, in Moldova, cigarillos are produced by 3 out of 4 companies that process and export raw tobacco: Tutun CTC (Chisinau), Inter-Tabaco (Tvardita), and International Tobacco (Orhei). Recently, cigarillos have become a budget-forming product for these enterprises - their production has allowed the use of idle equipment, and huge funds have been invested in adapting to higher production standards. For example, over the past 2 years, Tutun CTC has allocated about 100 million lei for the purchase of equipment, the development of new tobacco brands with the participation of accredited foreign specialists, and the establishment of work processes for the production of cigarillos. According to the director of the enterprise, Vladimir Capcelea, due to the new product group, continuous work was established at the factory, jobs were saved, while before its privatization, all personnel were in technical downtime due to the lack of state support and international manufacturers’ competition. Currently, in Moldova, imported cigarettes and cigarillos are taxed according to the same principle as those produced in Moldova: in 2021 the excise tax on cigarettes, regardless of the country of production, is 621 lei + 13% of the cost, but not less than 834 lei / per 1,000 pieces, and for cigarillos - 41% of the price. However, in some countries, in order to protect local producers, a differentiated taxation principle is applied - imported tobacco products are subject to higher taxes. Moldovan manufacturers consider this principle of taxation to be fair, since it is in the country of production that the added value of goods is formed, jobs are created for employees of enterprises, and related industries are developing. At the same time, manufacturers believe that cigarillos can become a “lifeline” for bringing the tobacco industry out of the shadows (over the past 2 years, the share of illegal tobacco products in Moldovan retail has exceeded 10%). This is especially true in the context of the annual market contraction due to the reduction in domestic consumption. It is noted that the Association of Tobacco Processors AP-Tutun has repeatedly appealed to the authorities with a request to eliminate the discriminatory situation in the tobacco industry. “Due to the weak protectionist policy, a negative trade balance of more than 1 billion lei is registered annually in Moldova between the import of tobacco products and the export of tobacco leaf. As a result, the volume of imports remains constant, while the export of raw materials decreases by 15-30% per year. Thus, if in 2000 tobacco exports amounted to $29.5 million, then in 2018 they decreased 28.8 times, to $1.6 million. In the last two years, the situation has worsened," writes the newspaper. Local businesses expect real support from the authorities to stop the industry's regression. They proposed a number of their own initiatives that will increase export supplies by $100 million a year, create more than 50 thousand jobs, and develop related industries. // 24.08.2021 - InfoMarket.
