September 26, 2012 / 1:51 PM / 5 years ago

Czech lower house approves higher cigarette tax

PRAGUE, Sept 26 (Reuters) - The Czech lower house approved a tax rise on cigarettes and tobacco on Wednesday, a move that will raise 1.4 billion crowns ($72.81 million) for next year’s budget while softening the price jump needed to meet EU norms by 2014.

The Czech Republic must bring its tobacco taxes in line with European Union directives in 2014. It has opted to implement that tax rise in two steps rather than enforcing a single big jump in prices in 2014.

The tax on a single cigarette will rise to at least 2.18 crowns ($0.11) from 2.10, and to 1,635 crowns from 1,400 per each kilogram of loose, or rolling, tobacco from Jan. 1.

From 2014, the taxes should rise to 2.25 crowns and 1,800 crowns, respectively. This will bring 1.7 billion crowns to public coffers.

The bill will now head to the Senate for approval.

Philip Morris CR, a listed unit of Philip Morris International, is the biggest Czech tobacco company with around half the market share.

The centre-right government has pledged to bring the state budget deficit below an EU ceiling of 3 percent of economic output next year, but its fiscal plans are under threat as rebels in Prime Minister Petr Necas’s oppose income and sales tax hikes.

The cigarette taxes will go toward lower the central budget deficit in 2013 to 100 billion crowns from a planned 105 billion this year. ($1 = 19.2278 Czech crowns) (Reporting by Robert Mueller; editing by Ron Askew)

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