Tobacco Sales Drop After Increased Taxation - The Reykjavik Grapevine

Tobacco Sales Drop After Increased Taxation

Published August 8, 2013

Sales figures of cigarettes have dropped by 10.4% since a tax increase on January 1st, which raised cigarette prices significantly.

The tax on tobacco was raised by 15% which means that the state treasury now gets 439.83 ISK off every packet of cigarettes, compared to 365.64 ISK in 2012. That’s an increase of around 17%.

According to new statistics from the Ministry of Finance, tax revenue from tobacco sales increased by 11.5% during the first half of this year. However, the increase is still 10% lower than was estimated when the taxation was decided upon, due to a decrease in cigarette sales.

“Taxation of tobacco is the best way to reduce its usage,” Viðar Jensson, project manager of anti-tobacco measures, told visir.is.

He says that international studies show that increased taxation discourages people to smoke.
“This is a very pleasant development. Finally tobacco prices have risen more than inflation so perhaps now they’re finally becoming too much to handle,” Viðar adds.

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