Austria’s government made a tidy profit from smokers in 2024, with tobacco tax revenues totalling €2.8 billion, including VAT, and contributing over 2% to the national budget, according to figures released by tobacco company JTI Austria.
Ralf-Wolfgang Lothert, a senior executive at JTI Austria, said the increase proves the current tax system is working. This system, in place until 2026, raises taxes on tobacco products gradually each year, with rates differing across product categories. A new tax plan will be needed from April 2027, which will be a job for Austria’s next government.
Cigarettes Heavily Taxed, Heaters Less So
Cigarettes currently face the heaviest tax burden, with 60% of their retail price going to consumption tax. By contrast, tobacco heaters are taxed at just 17%. Despite this, tobacco heaters are becoming increasingly popular, while cigarette sales continue to decline.
Ross Hennessy, CEO of JTI Austria, said a future tax plan is likely to increase taxes on lower-taxed products like tobacco heaters and introduce levies on new items such as nicotine pouches. He expects the changes to be “moderate,” but warned against further tax increases on cigarettes. “Overtaxing cigarettes would upset the market, pushing people towards untaxed or illegal products, which would mean less revenue for the government,” he said.
Cigarette Prices and Smuggling Concerns
The average price of a pack of cigarettes rose to €5.96 last year, up from €5.77 in 2023. Tobacconists also benefitted, with their annual revenue increasing by €1.47 million to nearly €3.9 billion. Around 70% of their income comes from selling tobacco.
In 2024, people in Austria smoked 12.5 billion cigarettes, slightly fewer than the 12.6 billion consumed in 2023. This includes an estimated 1.3 billion smuggled cigarettes, which made up 11.7% of the total market. The share of smuggled cigarettes has remained steady, causing an estimated €96 million loss for manufacturers and retailers. For the government, untaxed cigarettes resulted in €296 million in lost revenue.
