Galery

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Miscount of the Ministry of Finance brought 60 million euros in the state treasury last year, reported Imerisia. This became clear after the ministry's economists have found that the excise duty on bulk tobacco was wrongly charged. The error occurred still in the establishment of the law and it was passed without correcting it. The law says that the tax on bulk tobacco can not be lower than 75% of the average retail price of tobacco for rolling cigarettes which determined the excise duty at around 3.61 euros. In fact, however, the tax should be calculated based on the total amount of all taxes imposed on the retail price.

The error was passed in the two Parliament readings and became state law on the base of which the Government collected excise duty amounting to 60 million euros. According to the publication, the difference resulting from the error is equal to 2.70 euros more per any package of bulk tobacco in Greece. This figure reached 3.30 euro per package after VAT. The error appears to be correct only for the Ministry of Finance. It has increased the already low tax revenues, but penalizes tobacco growers and retailers by minimizing their profits.

"The sale of tobacco was the main source of revenue for owners of small shops and kiosks for newspapers and cigarettes. Now the profit from a box of cigarettes is five cents in the best case," complained the owner of a kiosk in the city centre. The end price of a package of bulk tobacco is four euros. The profit is minimal and is divided between the manufacturer, wholesaler and retailer. The profit from consumer price of 3.5 euros is so small that the sale of tobacco is meaningless.

Although the error in the calculation and imposition of excise duty on bulk tobacco has been found it probably will not be corrected because it already operates in favour of the state. Based on "the casino never loses" principle, economic analysts commented that most likely no measures in favour of manufacturers, retailers and consumers will be taken. The only trump card is in the hands of major tobacco-growing domestic and foreign corporations which will require to meet the Finance Minister George Papaconstantinou for explanation and possible solution of this case. According to unconfirmed information, the managers of the leading companies in the sector have stated that they will resort to further increase in the price of cigarettes in 2011 if the error is not corrected.