Local cigarettes are more expensive
Grand Holding, which is the leader in Armenian cigarette production, has increased cigarette prices by 60 drams starting on January 1. According to President of Armenian Manufacturers Association Vazgen Safaryan, the inflation will inevitably reduce the amount of cigarette sales, which makes up 55 percent of the market.
"When local cigarettes were cheaper than the imported cigarettes, buyers would buy the local ones. Now, there is no difference anymore," Safaryan said during an interview with "A1+". Nevertheless, he says what attracts buyers is not only the price, but also the quality.
Surveys with citizens buying cigarettes confirmed Safaryan's view. Many complain about the inflation, but aren't rushing to buy other cigarettes.
"Armenian cigarettes are better than foreign cigarettes," said one citizen.
"Those who smoke Armenian cigarettes can't afford to buy expensive cigarettes. I have a client that has started buying foreign cigarettes after the inflation," stand owner Arevik said.
The President of the Armenian Manufacturers' Association says the reduction of local cigarette sales will also cause problems in the labor market. He mentioned that Grand Holding had 480 hectares of cigarette plantations with 3,200 employees. Besides that, it has 5 drying machines with 200 employees.
"The government had to take this into consideration and change the taxing rates," Vazgen Safaryan said.
In addition to this, Armenia, which has a weak economy, had expressed commitment to the World Health Organization to create equal conditions in the market for imported products and local production.
Safaryan says local producers should produce with high technologies for lower prices and more competitive products.
He is certain that the government should reduce pressure on taxes in order to encourage local production. However, the government has increased the taxes on several products, including cigarettes and alcohol in order to ensure tax entries worth 101 billion drams.
"Last year the government collected 650 billion drams in taxes, and half of that is the Value Added Tax, which directly hits consumers' pockets," Vazgen Safaryan mentioned.
