2.7 billion euros: Austria earns well from its smokers

The Ministry of Finance received around 2.1 billion euros from tobacco tax in 2023 – including VAT even 2.7 billion euros. This emerges from a newsletter published on Thursday by the tobacco company JTI Austria.

Ralf Wolfgang Lothert, member of the management board of JTI Austria, sees the fact that tax revenues have remained stable and not increased despite significant price increases “as an indication of the need for reform in the coming years.”

The market share of classic cigarettes is declining. Tobacco heaters as an alternative, however, continue to gain ground. Their market share is now around 7 percent and the trend is rising. Tobacco-free alternative products such as nicotine pouches or e-cigarettes, however, only accounted for a relatively small proportion in Austria. Due to the lower taxation of alternative tobacco products compared to cigarettes, the state lost tens of millions in taxes every year, criticized Lothert.

Tobacco market developed stable

The classic tobacco market developed stable last year. In 2023, 12.6 billion cigarettes were smoked, including those that were not taxed in Austria. Compared to 2022, this corresponds to a “moderate decline in volume,” said JTI Austria boss Ross Hennessy. Cigarettes have become more expensive for consumers. The weighted average price for the package rose from 5.502 to 5.77 euros.

The tobacconist’s annual turnover from tobacco products amounted to 3.8 billion euros, with the average revenue of specialist tobacco shops increasing significantly. The trading margins rose by 8.2 percent to 191,000 euros.

11.6 percent share of smuggling

The proportion of smuggling was 11.6 percent in the previous year. The tax loss due to cigarettes not taxed in Austria is estimated to be around 285 million euros for 2023. According to JTI Austria, the damage to manufacturers and retailers is around 91 million euros.

Of the price of a cigarette in Austria, 76 percent goes to the state in the form of tobacco tax; the rest goes to manufacturers, wholesalers and tobacconists. At an average of 5.77 euros per pack, cigarettes are more expensive in Austria than in the neighboring countries of Slovakia and Slovenia (4.60 euros each), Hungary (5.57 euros) or Italy (5.20 euros). Smokers in Germany (7.00 euros), Switzerland (8.71 euros) and the Czech Republic (5.84 euros) have to dig deeper into their pockets.

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