Cigarettes and Hard Alcohol Spirits to Be 50% More Expensive?

By 23 July 2018

Great news for shops in neighbouring countries.

The latest draft of the Health Insurance Act has been prepared in recent days, and it envisages a greater inflow of money into the healthcare budget because without that Croatia will continue to lag behind in medical innovations, reports Jutarnji List on July 23, 2018.

However, many will be unpleasantly surprised with some of the provisions, particularly since they will hit the pockets of smokers and fans of alcoholic spirits, as well as car insurance companies. If the proposals are accepted, the price of cigarettes and hard alcohol drinks will increase by 50 percent compared to the current price.

The Ministry of Health's intention is to increase by 50 percent the current price of a cigarette pack and forward this amount to the healthcare budget. This means that, for example, a pack of cigarettes which now costs 20 kuna will have 10 kuna added to its price. It has not yet been decided whether any additional taxes will be paid on the 10 kuna increase. But, in any case, it is expected that this provision could bring in between 1 and 1.5 billion kuna a year.

As expected, the Croatian Employers' Association is opposed to the change, since that would surely reduce the producers’ revenues. But, on the other hand, Croatia is among the EU countries with the lowest cigarette prices, which is certainly one of the reasons why the smoking levels in Croatia are not declining. On the contrary, Croatia is one of the few countries in which the number of smokers is growing.

Another suggestion is that alcoholic spirits should also contribute to the healthcare fund in a similar way. It is proposed that the retail price of hard alcohol drinks should be increased by 50 percent from the current one. For example, if a bottle of spirits costs 50 kuna, another 25 kuna would be added and paid directly to the Croatian Health Insurance Institute.

The health fund should also receive higher payments from insurance companies, as it is proposed that, instead of the current four percent of the premiums on compulsory car insurance, the insurance companies should pay seven percent. The companies currently pay about 45 million kuna for medical treatment of people hurt in traffic accidents over the year, and that would be raised to about 70 million kuna.

Given that debts in the healthcare system are growing by 50 million kuna a month, and there is there is no indication that anything could change for the better anytime soon, since around 23 billion kuna which the healthcare system has available annually is insufficient to cover all the costs, it is obvious that it is necessary to find new sources of financing. These proposals could be partly a way out of the financial trouble. However, that should be accompanied by a complete reorganization of the healthcare system which has not yet even started.

Translated from Jutarnji List (reported by Goranka Jureško).