With the decision in the Official Gazette, the ÖTV model for cigarettes changed: What is the status of the July expectation for a hike?

With the beginning of July, the eyes of millions of cigarette users and those closely monitoring the market were on the legal regulations expected in cigarette prices. In particular, the automatic Special Consumption Tax (ÖTV) increases made at this time of every year created a serious expectation of price increases among consumers. Upon this expectation, the Presidential Decision published in the duplicate issue of the Official Gazette was released, and the uncertainty regarding the issue was eliminated.

According to the published decision, the automatic tax increase mechanism planned to be valid for cigarettes and other tobacco products between July and December was canceled. This situation indicates a transition to a different taxation policy by putting an end to the routine hike system applied in previous years. The decree states that a direct hike rate is no longer updated; instead, a new model regarding the base and rates that constitute the basis of taxation has been put into effect.

The new system includes an ÖTV model designed to prevent imbalanced increases seen in prices. With this model, it is aimed to bring market price imbalances and gaps between brands under control through tax means. When looking at the details of the application, it is understood that a regulatory step was taken that goes to the base of the pricing structure, rather than just a change in tax rates.

In comments made by economy and consumer groups, it is evaluated that this step was taken to lighten the burden of the consumer in an economy under inflationary pressures. However, considering the cost structures of producing companies and market conditions, how the reflections of this tax regulation will be remains a matter of curiosity. According to the proposal, it is aimed to minimize fluctuations in cigarette prices and to create a transparent price mechanism.

Consequently, a structural tax change was preferred instead of the direct and high-rate automatic hike expected for July. This new decree in the Official Gazette marks the beginning of a new era in the sector by fundamentally changing the calculation method of taxes collected from cigarettes and tobacco products. Consumers continue to closely monitor when and how this change will reflect on market prices.