OREANDA-NEWS. August 02, 2011. If the EU s demand is met and Moldova sharply increases excise duties on cigarettes, contraband might expand, participants in the International Euro-monitor Conference on taxation issues in Moldova, held in Chisinau, said.

The excise duties should be increased gradually, in a predictable manner and proportionately with power purchase. Special attention should be paid to the resources needed to combat the smuggling of goods, experts from Lithuania, Bulgaria, Hungary and Romania said.

The experts noted that "in countries where excise duties hiked sharply, the contraband recorded spectacular levels: 50 per cent in Lithuania, 48 per cent in Bulgaria, 36 per cent in Romania and 37 per cent in Hungary".

Referring to excise duties, the International Monetary Fund's Representative in Moldova, Tokhir Mirzoev, emphasized that it is advisable to negotiate the gradual adjustment of taxes, because when it comes to tobacco there is high risk of law evasion. "Ensuring a balance is a delicate and difficult process, and it is important to ensure a fair fiscal burden," the IMF representative said.

"Moldova's market is small and vulnerable to any change of the rules. The Moldovan government favours adjustment to the European Union's recommendations. Yet, analyses show that there are major discrepancies, and that a longer period of implementation is needed," Deputy Minister Calmic said at the conference.

The Finance Ministry announced intentions to increase excise duties on tobacco goods as follows: 40 lei +27 per cent for 1,000 filtre cigarettes in 2012; 80 lei +36 per cent in 2013 and 120 lei +45 per cent in 2014.

Earlier, Deputy Economics Minister Octavian Calmic has told journalists that the EU insists on Moldova adjusting the excise duties till 2018, which means a 30-fold rise in a very short period. For its part, Moldova asked for the extension of the deadline till 2030. The deadline issue is to be settled during talks on the EU Association Agreement.