Currently, some 74% of the retail price of cigarettes goes directly to the state. This means that tobacco companies like JTI make a significant contribution to tax revenue. In Austria, this amounts to a total annual payment of around EUR 2.175 billion in 2025, making tobacco tax second in terms of generating excise tax revenue for the state after petroleum tax.
The current model for calculating the amount of tax is complex. The excise tax on cigarettes is calculated on the basis of a mixed tax rate, consisting of two components: a specific tobacco tax rate (as of 1 April 2026 EUR 85.50 per 1,000 units of cigarettes) and a variable tobacco (ad-valorem) tax rate (32.0% of the retail sales price1).
However, the high taxation on tobacco has many consequences, including the illegal import of products from abroad. That is why it is important for the government to take the expertise of tobacco manufacturers into account when developing a market-friendly taxation model.
Calculation example with a retail price of EUR 6.80 (pack of 20 cigarettes)2:
Tobacco tax EUR 3.89
VAT EUR 1.13
Trade margin (tobacconist)3 EUR 0.94
Industry incl. wholesale trade EUR 0.84
1 The retail price is the price set by the manufacturer for individual cigarettes, cigars and cigarillos and for packs of smoking tobacco
2 As of February 2026
3 The profit margin for tobacconists is regulated by statute in Section 38 of the Tobacco Monopoly Act