Tax duty increase for loan: Russia wants to cut illegal tobacco flow from Belarus

Russian producers want a harmonization of excise duties on cigarettes in order to reduce the flow of illegal Belarusian tobacco products in Russia. Thus, the Russian ‘Tabakprom’ association of tobacco producers has offered the Kremlin to give Belarus a loan of $ 1 billion dollars after the indexing of local excise duties on cigarettes.

According to the “Tabakprom”, Russia’s budget suffers from illegal tobacco coming from Belarus.

In the border regions of Belarus, the share of illegal cigarette trade has increased significantly over the year: it amounted to 8% in 2016, and this year it is already 20%. Thus this year’s share of Belarusian products in the total volume of the illicit market has accounted for almost 30% (although last year it was only 9.4%).

The reason for this growth lies in the retail excise duty difference and, consequently, the price difference between the Belarusian and Russian tobacco products.

The Russian tobacco companies sent relevant letters to the office of the first vice-premier Igor Shuvalov and Finance Minister Anton Siluanov. The Shuvalov’s administration said that they had not received the letter yet, the RBK reports.

On April 9 it became known that Russia would give Belarus a loan of $ 1 billion. It was not disclosed, when and under what conditions the money would be allocated. Economists have said that the new money from Moscow would not unleash the country’s economic problems, but rather increase the political dependence of Belarus on the Kremlin.