The Russian government has floated a plan to lift the excise tax on cigarettes by 3 percent beyond current planned rates for 2024. This proposal appears in draft amendments to the Tax Code of the Russian Federation, published in the electronic records of the State Duma for review by lawmakers and stakeholders. The move aims to adjust tobacco taxation in line with evolving public policy and budget needs as the new year approaches.
An explanatory note accompanying the bill clarifies that the changes would take effect on January 1, 2024, aligning the tobacco excise with the broader fiscal framework. This signals a shift in how tobacco products contribute to the state budget and how price signals can influence consumer behavior in the market for smoking products.
Under amendments to the Tax Code that were adopted toward the end of July, the existing plan set the excise on cigarettes at 2,731 rubles per 1,000 pieces plus 16 percent of the estimated cost for the year 2024. The fresh proposals modify this schedule, proposing an excise of 2,813 rubles per 1,000 pieces plus 16 percent of the estimated cost, but with a floor not less than 3,820 rubles. In other words, the tax would rise again, ensuring a minimum level of revenue from tobacco regardless of market fluctuations.
In August, the Ministry of Health aligned with the Ministry of Finance on a proposal to raise excise duties specifically on cigarettes when the pack price exceeds 200 rubles. The policy goal behind this targeted approach is to curb consumption among higher-priced segments while preserving affordability for lower-cost products, a nuanced balance often seen in health and fiscal strategies.
Earlier, on July 21, the State Duma passed a law to index tariffs on alcohol, cigarettes, and automobiles by 5 percent in 2024 and by 4 percent in 2025 and 2026. This law reflects a broader trend of annualized adjustments to consumption taxes that respond to inflation and economic conditions while preserving revenue streams for the state budget.
Later that month, on July 31, President Vladimir Putin signed a law enacting a 5 percent indexation of consumption taxes for the coming year. The presidential action formalized the congressionally approved adjustment, reinforcing the government’s plan to align taxation with current fiscal realities and policy priorities.
There have been discussions in regulatory circles about further options, including the possibility of increasing excise rates on wine in Russia. This potential move would broaden the scope of tobacco and alcohol taxation, tightening price signals and potentially altering consumer choices across multiple categories of alcohol and nicotine products. The overall trend points to a more robust tax regime designed to support public finances while influencing consumer behavior through price changes.
As the regulatory process unfolds, industry observers and public health analysts watch closely for the precise implementation timelines, any transitional provisions, and the final language of the Tax Code amendments. The evolving framework will shape retail pricing, consumer access, and government revenue throughout the coming year and beyond. Stakeholders in Russia and regional markets will be assessing the impact on manufacturers, distributors, retailers, and final consumers as the new rates take effect and enforcement guidance is issued by authorities.