The Bulgarian Ministry of Finance has announced significant increases in excise taxes on tobacco products and alcoholic beverages, including beer, as part of a broader strategy to boost government revenue.
Set to take effect in 2025, these hikes aim to align excise rates closer to European standards while generating an additional 230 million leva in revenue.
Alcohol Excise to Rise by 10-15%
Excise taxes on alcoholic beverages will see a 10-15% increase, affecting products like beer and spirits. This adjustment, approved by a majority of political forces in parliament as well as trade unions and employer organizations, will bring Bulgaria’s excise rates closer to the European Union’s norms. Currently, the country’s alcohol excise duties are at the EU’s minimum levels.
Finance Minister Lyudmila Petkova underscored the rationale behind the change during parliamentary discussions, highlighting that despite the increase, alcohol taxes contribute a modest 5% to the total excise revenue.
Under the new framework, alcohol excise duties will continue to vary depending on the alcohol content. Presently, the excise rate ranges from 90 leva to 1,100 leva per hectoliter for alcoholic beverages, while wines remain exempt from duties.
Homemade brandy is taxed at 550 leva per hectoliter of pure alcohol. Beer currently faces an excise rate of 1.50 leva per hectoliter, with small breweries benefiting from a reduced rate of 0.75 leva.
Tobacco Taxes to Face Steeper Hikes
Tobacco products will see a more pronounced rise in excise duties, with the Finance Ministry proposing to expedite increases initially planned for 2025 and 2026.
The excise tax on cigarettes will jump from 194 leva per 1,000 cigarettes to 211 leva. As a result, the price of a pack of cigarettes is expected to increase by 70-80 stotinki.
Smoking tobacco will also face higher duties, with excise taxes rising from 184 leva per kilogram to 222 leva. Heated tobacco products will see an even steeper increase, from 331 leva to 400 leva per kilogram.
Other smoking products, including herbal mixtures and non-nicotine products, will also be subject to higher taxes under the revised rates.
The Ministry anticipates that these accelerated adjustments will significantly boost excise revenue. Tobacco products alone are expected to account for the majority of the additional 230 million leva in revenue projected for 2025.
Ministry Rejects Inflation Concerns
Despite the upcoming tax increases, the Ministry of Finance maintains that the hikes will not have a pro-inflationary effect. Officials argue that the changes will not derail Bulgaria’s efforts to achieve its goal of maintaining a 2% inflation rate, a key requirement for eurozone accession.
With excise duties on alcohol and tobacco currently among the lowest in the EU, the government believes the increases are necessary for fiscal sustainability and economic alignment with European standards.
Consumers, however, are bracing for higher prices, as the new excise tax rates will inevitably make alcohol and tobacco products more expensive. For now, both the Ministry and supporters of the measure view the changes as a step toward greater fiscal responsibility and harmonization with EU practices.