Budget revenues from cigarette excise turned out to be one-third below plan, says Hetmantsev

The shadow cigarette market led to the shortfall of almost 4 billion UAH in excise tax paid to the state budget in October alone 2026 year.

He notes that only in October this year the state budget missed 18,8 billion UAH from VAT and excise. The main decrease in revenues from the excise is recorded in the tobacco industry — here the shortfall in meeting the plan was 3,8 billion UAH, or 32,4%. According to him, the monthly plan for state budget revenues from VAT was unmet by 11,7 billion UAH, or by a record 32%. According to the head of the parliamentary tax committee, in October 2026 year excise and VAT were two of the worst-performing taxes in terms of revenue plan execution. “The execution figures are not a ‘technical deviation,’ but a diagnosis. Systematic work to formalize the shadow economy should yield results primarily in VAT and excise, and it is exactly here that it has failed,” concludes Hetmanets. Also read: “Populist mistake.” Hetmanets proposes abolishing National Cashback. The illegal cigarette market continues to grow. With such an assessment, journalist-investigator Yevhen Plinsky agrees. “Already Prime Minister Koretsky is holding weekly meetings with law enforcement on detaxation, already the head of the State Tax Service has been replaced with someone understandable to the Ministry of Finance, not the General Prosecutor, already the tasks of the National Police and the Bureau of Economic Security have been ‘outlined,’ and taxes on vaping products and VAT are decreasing,” Plinsky writes in his Telegram channel. He notes that points of sale for counterfeit cigarettes are increasing, the supply of non-taxed solvent for producing counterfeit fuel is growing, and the “sludge” from UVAPE for electronic cigarettes will soon be in every school. As a reminder, according to the latest Kantar Ukraine study, in July 2026-th, the share of illegal product on the Ukrainian cigarette market was 21,6%. This is the worst figure in two years, while the electronic cigarette market remains almost entirely in the shadows. Moreover, during the current year there is a clear growth in the share of illegal cigarettes on the Ukrainian market. For comparison, this year in April the share of illegal cigarettes was 19,8%, and in February 2026 year — 17,6%. The projected annual losses to the state budget from the illegal cigarette market, according to Kantar Ukraine, amount to a record 36,4 billion UAH. Also read: There will not be tax holidays for everyone: Hetmanets explained the risks for financing the army. The government is strengthening anti-shadow measures. In October, under the leadership of Prime Minister of Ukraine Serhiy Korigetsky and Minister of Finance Serhiy Marchenko, a meeting of the Interagency Working Group on Detaxation of the Economy took place, where its composition was updated and key priorities were defined. Specifically, in the field of countering the illegal tobacco products market, the emphasis was placed on systematic analytical work and strengthening controls over illicit production and movement across the customs border. The prime minister, following the meeting, noted that the government's priority measures include work on the taxation of electronic cigarettes and liquids for them, combating smuggling, and eliminating schemes for tax evasion. The official also promised to focus on manipulation in the gambling business, tighten supervision over the targeted use of humanitarian aid, and implement electronic document management. For each area, responsible parties and deadlines were defined, and progress reporting will be conducted monthly.

Earlier we wrote that in Ukraine there are proposals to raise fines for illegal sale of liquids for electronic cigarettes to 250 thousand UAH for effective crackdown on the shadow market.