Excise tax increases will raise the final price of goods by approximately 12-13% - Hrant Mikaelyan
17.07.2026,
14:32
Increasing excise taxes on tobacco and certain categories of alcoholic beverages in Armenia has not only fiscal but also social significance, according to economist Hrant Mikaelyan.
YEREVAN, July 17. /ARKA/. Increasing excise taxes on tobacco and certain categories of alcoholic beverages in Armenia has not only fiscal but also social significance, according to economist Hrant Mikaelyan.
On July 3, the National Assembly of Armenia approved amendments to the Tax Code establishing excise tax rates for 2027-2029. They will come into force on February 1, 2027. Excise taxes on wine, cigarettes, and vaping devices will increase.
"If we consider that these activities, particularly smoking, are harmful to society, affect health, and, accordingly, degrade human potential, and, in the long term, the national product, then yes, combating these effects makes sense. "And increasing excise taxes could lead to a decline in consumption of these substances," Mikaelyan said in an interview with the ARKA news agency.
The economist also noted that doubling the turnover tax in 2025 did not lead to a twofold increase in collections, and a significant portion of the funds went underground, recalling that Armenia ultimately lost approximately 29 billion drams in taxes.
"In this case, I don't think the shift to the underground will be significant, because the trade sector is quite strictly controlled, and, moreover, informal trade in Armenia is almost nonexistent. That is, almost all trade is primarily conducted through small and large stores, where controls are high, making it almost impossible to sell alcohol or cigarettes informally without excise taxes," he explained.
However, the expert believes that the increase in excise taxes will gradually impact consumption. "Increasing excise taxes on cigarettes by 10%, and then by another 15%, and on e-cigarettes and wine by about 25%, will increase prices. Specifically, a 25% increase in excise taxes on any given product will lead to a final price increase of approximately 12-13%," he said.
Mikaelyan believes this is significant, but not fundamental in the sense that there won't be a sharp decline in wine or cigarette consumption.
"Most likely, the process will be slow and will affect smoking in particular, since the anti-smoking campaign has been underway for several years, albeit not very aggressively," he added.
On July 3, the National Assembly of Armenia approved amendments to the Tax Code establishing excise tax rates for 2027-2029. They will come into force on February 1, 2027. Excise taxes on wine, cigarettes, and vaping devices will increase.
"If we consider that these activities, particularly smoking, are harmful to society, affect health, and, accordingly, degrade human potential, and, in the long term, the national product, then yes, combating these effects makes sense. "And increasing excise taxes could lead to a decline in consumption of these substances," Mikaelyan said in an interview with the ARKA news agency.
The economist also noted that doubling the turnover tax in 2025 did not lead to a twofold increase in collections, and a significant portion of the funds went underground, recalling that Armenia ultimately lost approximately 29 billion drams in taxes.
"In this case, I don't think the shift to the underground will be significant, because the trade sector is quite strictly controlled, and, moreover, informal trade in Armenia is almost nonexistent. That is, almost all trade is primarily conducted through small and large stores, where controls are high, making it almost impossible to sell alcohol or cigarettes informally without excise taxes," he explained.
However, the expert believes that the increase in excise taxes will gradually impact consumption. "Increasing excise taxes on cigarettes by 10%, and then by another 15%, and on e-cigarettes and wine by about 25%, will increase prices. Specifically, a 25% increase in excise taxes on any given product will lead to a final price increase of approximately 12-13%," he said.
Mikaelyan believes this is significant, but not fundamental in the sense that there won't be a sharp decline in wine or cigarette consumption.
"Most likely, the process will be slow and will affect smoking in particular, since the anti-smoking campaign has been underway for several years, albeit not very aggressively," he added.
