VILNIUS - Many Lithuanian wholesalers have decided it is cheaper to burn the cigarettes they have stored in their warehouse rather than to pay the higher excise taxes that went into force on March 1, according to reports.
In accordance to the regulations, importers and wholesalers must have their cigarettes marked with the new excise before they can sell them to shops and kiosks. Retailers can still sell cigarettes with the old excise marks.
The State Revenue Service has said that there are approximately 2 million packs of cigarettes in storage in Lithuania. Before they can hit the store shelves, wholesalers will have to pay the difference in excise taxes, or approximately 1 million litas (290,000 euros).
For those wholesalers who don't want to pay the excise, they can petition the State Revenue Service for permission to destroy the cigarettes. In return, they will receive back all previous excise taxes paid. The service said that it will likely have to return some 1.7 million litas in excise taxes through this procedure.
In December Parliament approved a 17 percent hike in the excise tax for cigarettes. The hike will continue to exacerbate the country's inflation situation, and it is possible that in March Lithuania could overtake Estonia in terms of annual growth of the consumer price index.
Lithuania is obliged to raise the excise on cigarettes so as to reach the minimum EU rate 's or 57 percent of the average retail price of the most popular cigarettes, and at least 64 euros per 1,000 cigarettes 's by Dec. 31, 2009.
