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Hungary tobacco tax increase and rise in illicit trade

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2026-10-09 04:08 UTC → 2026-10-24 09:52 UTC · added ~~removed~~

The Hungarian government has approved a plan to increase tobacco excise taxes to provide additional funding for the national healthcare system. The legislative package includes a 9% increase for cigarettes, a 25% increase for heated tobacco products, and a 26% increase for fine-cut tobacco. Officials noted that the cost of treating tobacco-related illnesses—which cause between 20,000 and 25,000 deaths annually—is nearly double the revenue currently generated from tobacco taxes. In 2025, the direct and indirect healthcare costs associated with tobacco consumption were estimated at approximately 1,477 billion forints, or 1.7% of the country’s GDP, while tobacco-related tax revenue totaled roughly 775 billion forints. The tax adjustments are expected to generate approximately 90 billion forints in additional revenue. Following an accelerated excise tax hike approved by Parliament, significant price increases were set to take effect on November 1. Rising domestic costs have prompted consumers to look toward neighboring countries for savings, as prices in Hungary are significantly higher than in Austria and Croatia. For instance, a carton of cigarettes in Croatia is currently roughly 8,000 HUF cheaper than in Hungary, a gap expected to widen to 10,000 HUF following the hike. Recent research indicates that these measures may be accompanied by a rise in illicit trade. A YouGov study found that 10 percent of traditional cigarettes examined were counterfeit, an increase from 8.9 percent in the previous half-year. The highest rates of counterfeits were recorded in Eastern Hungary at 11.8 percent. Additionally, because flavored e-cigarettes are banned in Hungary, demand has shifted to unregulated channels. Over 80 percent of sampled disposable e-cigarettes exceeded EU legal nicotine limits. This strengthening black market for illegal, untaxed products could result in an annual state tax revenue loss of at least 80 billion forints.

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