PRAGUE - Legislators in the lower house of the Czech Republic okayed a government measure to increase tobacco product taxes starting January 2012, Bloomberg News reports. The higher taxes are needed to bring in more funds for the state budget.
The Czech Finance Ministry drafted the law amendment necessary to fulfill European Union bills. The ministry predicts the tax increases will generate around $136 million in 2012. Two years after that, tobacco taxes would jump again in order to bring them up to EU legislation.
Higher tobacco taxes could assist Prime Minister Petr Necas€™s government close the fiscal gap as it attempts to slash the deficit to less than the EU limit of 3 percent of economic output by 2013. Last year, the Czech Republic had a deficit of an estimated 4.8 percent.
The hike would bring the cigarette tax to 1.12 koruna apiece, up from 1.07 koruna. The tax on cigars and cigarillos would jump to 1.25 koruna apiece, up from 1.15 koruna. Tobacco tax will soar to 1,400 koruna per kilogram (2.2 pounds), up from 1,340 koruna.
The amendment now goes to the Senate for consideration before heading to the desk of President Vaclav Klaus. The lower house could override any vetoes of the amendment by Klaus or the Senate.