CASE's new report:The significance of the tobacco product manufacturing to Poland’s economy
Poland produced 175 billion cigarettes and about 27,000 tons of other tobacco products in 2016, placing the country second among EU producers. Tax inflows from manufacturing and consumption of tobacco products that year amounted to about PLN 24.4 billion, or 8.9% of total tax revenues, according to estimates from CASE, the Center for Social and Economic Research. The tobacco industry is responsible for 560,000 jobs in the country, including about 50,000 working in tobacco cultivation, 10,000 in manufacturing and almost half a million jobs in trade.
CASE experts forecast that the high level of output will continue over the next few years, thanks to continued growth in investment and exports. Already three out of four cigarettes produced in Poland are sold abroad, and all leading global tobacco manufacturers have a presence in the country.
Production and consumption of tobacco products generated about PLN 24.4 billion in tax revenue in 2016: PLN 18.5 billion in excise tax, PLN 5.5 billion in VAT, about 250 million in CIT and about 124 million in PIT. Tobacco products are sold in almost 120,000 retail outlets, most of which belong to the SME sector; tobacco often accounts for as much as 40% of their turnover.
CASE has prepared two potential scenarios for the industry: short- and long-term growth or decline, to examine how changes in the industry affect the Polish economy. “In the next few years, the sector’s growth prospects will depend on a range of challenges, including regulatory ones,” said Grzegorz Poniatowski, PhD, scientific director for fiscal policy at CASE. “In the decline scenario, with rising production costs, an unstable legislative environment and a declining value of the domestic market, investment will also decline. With a stable legislative environment, including a stable tax burden, investment in the sector will continue, and exports will keep on growing.”
“The benefits to the budget from the growth scenario as opposed to the decline scenario can be as great as PLN 17 billion over 10 years, according to our calculations,” Poniatowski added.
The CASE report The significance of the tobacco product manufacturing to Poland’s economy is the first such comprehensive study of the industry. It describes current conditions, presents the challenges facing the industry and forecasts its influence on the broader economy, on the basis of various scenarios for the future. The report covers the sector’s entire value chain, from tobacco cultivation through processing of the raw tobacco and product manufacturing, to distribution and sales of the final product. The analytical work is based on three pillars: analysis of existing data, expert interviews and a mathematical model of the Polish economy expanded to include production and consumption of tobacco products.
