One of the goals of the Tobacco Tax Act is to promote also the health policy goals of the Tobacco Act. Tobacco tax is collected on cigarettes, cigars, cigarillos and roll-your-own tobacco as well as other products containing tobacco and rolling paper. Since 2017, tobacco tax has also been collected on nicotine and nicotine-free liquids of electronic cigarettes.
The tobacco tax has been raised regularly in recent years, twice a year.
In 2018, the tax structure of cigars was altered to be similar to that of other tobacco products. Now, in addition to value tax, per unit tax is also levied for cigars. The goal is to raise the level of cigar taxes in euros at least to the same level with inexpensive cigarettes.
Tax revenues grow
In 2020 the Finnish Government received 1,1 billion euros in tobacco tax revenue. Tobacco tax revenue has grown steadily throughout the 2000s despite the fact that smoking has decreased.
In 2018, the share of undocumented consumption of cigarettes was about 11–13 per cent of the overall consumption. The overall consumption of cigarettes was about 4.5 billion cigarettes. Of this, the share of passenger import was about 8 per cent, and the share of smuggled cigarettes 3–5 per cent. Furthermore, online purchase of cigarettes was approximately 0.5 per cent of the overall consumption.
Passenger import is controlled by the Tobacco Act’s restriction based on warning labels according to which, a passenger may only import 200 cigarettes to Finland if the packets do not have text warnings in Finnish and Swedish.
Vast differences between EU countries
There are considerable differences in the tobacco taxation and the prices of tobacco products in different EU countries even though tobacco taxation has been harmonised with the tobacco taxation directive.
According to the Ministry of Finance, Finland has the fourth highest tax and price level in EU countries when comparing the average price of cigarettes in each country. The taxation of cigarettes is highest in Ireland, the United Kingdom and France. However, when comparing the tax burden in euro, account must be taken not only of the price levels in the various countries, but also of those in their immediate vicinity.
Did you know that
- The World Health Organisation and the World Bank recommend raising tobacco tax. According to them, raising tobacco tax is one of the most efficient ways of cutting down the consumption of tobacco products.
- The high price of tobacco prevents people from taking up smoking, increases the number of attempts to quit and reduces health differences between different demographic groups.
- According to the Word Bank, the health impact of the tax level should be priority in tobacco taxation.