Category: Taxation

  • A question of customs

    A question of customs

    A Bulgarian member of the EU Parliament has asked the Commission whether using an external company for loading and unloading excisable goods for the purpose of making customs checks constituted a breach of its regulations.

    In a preamble to two questions that are due to be answered by the Commission in writing, Angel Dzhambazki said that, in Bulgaria, it was the practise for Customs Agency staff to be present at the loading and unloading of excisable goods, following which a report was filled out. ‘However, most consignments of freight are subject to a follow-up check at the customs control points located at border crossings,’ he said.

    ‘Under Regulation (EU) No 952/2013 of 9 October 2013 laying down the Union Customs Code, responsibility for the follow-up check and for loading/unloading lies with the Customs Agency, but at the Kalotina customs control point the Bulgarian authorities refuse to carry out this work, thus obliging carriers to hire an external company to do it.’

    Dzhambazki then asked:

    1. ‘Is the Commission aware of this problem?
    2. ‘Does the Commission consider that using an external company for loading/unloading for the purposes of customs checks constitutes a breach of Regulation (EU) No 952/2013?’
  • Oman prepares for sin tax

    Oman prepares for sin tax

    Oman is due soon to follow in the footsteps of Saudi Arabia, the UAE, Bahrain and Qatar in imposing a selective tax on tobacco, alcohol, energy and carbonated drinks, according to a story in The Muscat Daily.

    The imposition of a new 100 percent excise tax will double the retail prices of tobacco products, alcoholic beverages and energy drinks, while carbonated drinks will attract a 50 percent excise tax.

    The Gulf Cooperation Council (GCC) member countries’ framework on ‘Unified Selective Excise Tax’ is expected to be formally ratified this year. It was reviewed and endorsed by the Majlis A’Shura (Consultative Council) and the State Council at the end of 2018.

    Speaking to the Daily, Dr. Jawad al Lawati, rapporteur at the National Tobacco Control Committee, said that except for Oman and Kuwait, all GCC states had ratified and implemented the selective excise tax. “As it has already been vetted by the Majlis A’Shura and State Council, only a Royal Decree is awaited for it to become a law,” he said.

    The new taxes were first unveiled in Oman’s 2017 budget.

    They have been dubbed ‘sin’ taxes because they are imposed on consumer goods considered to pose a risk to health.

  • Smokers hit by price hike

    Smokers hit by price hike

    New Zealand’s Quitline has seen a surge of people saying they want to give up tobacco smoking after the tax hikes on New Year’s Day, but many smokers say the price increase won’t change their habits, according to a story on Radio New Zealand.

    The price of cigarettes increased by 10 percent on January 1, raising the average retail price of a 20-piece pack by NZ$2 to NZ$27.

    During the past six years, cigarette prices have been pushed up by NZ$11 a pack.

    Quitline was contacted 1,700 times in the first week of January, about 500 more times than in the same week last year.

    “The new year is a time when people look to improve their health,” said Quitline chief executive Andrew Slater. “[For] smokers, it’s when they think most about giving up smoking.”

    But a Ministry of Health tobacco tax excise evaluation released last year showed focus groups thought most smokers would rather pay more rather than go without cigarettes.

    Ben Youdan, a spokesperson for Action for Smokefree New Zealand, said New Zealand was now one of the most expensive places to be a smoker.

    It was obvious that smoking was addictive, he said, but it could also be a personal issue for people.

    The Ministry of Health said it was committed to the Smokefree 2025 goal and considered vaping and e-cigarettes a less harmful alternative to smoking and combustible cigarettes.

  • Threat to SA’s growers

    Threat to SA’s growers

    South Africa is at risk of losing its tobacco-growing industry if British American Tobacco Southern Africa (Batsa) switches to buying tobacco from overseas, according to a story in the Business Day.

    Batsa recently notified the country’s only tobacco processor, Rustenburg-based Limpopo Tobacco Processors (LTP), that it might have to consider buying foreign tobacco should the illicit tobacco industry gain further traction.

    Christo van Staden, the MD of LTP, was quoted as saying that the move would put the existence of his company in doubt.

    “With an estimated global over-production of tobacco leaf expected this year and declining markets, it will be impossible for LTP to find alternative markets for these huge volumes of tobacco,” Van Staden said.

    According to the story, Batsa said it was considering the switch because of the deteriorating market conditions for the tax-paying portion of the industry.

    In December 2018, research firm Ipsos said cigarettes selling for less than the tax of R17.85 per pack owed to the SA Revenue Service had grown market share by more than 25 percent, from 33 percent to 42 percent in three months.

    It was not spelt out why Batsa would find it necessary to switch to buying tobacco from overseas if illicit tobacco products increased their share of the domestic market, but presumably it believes that it can buy tobacco cheaper from elsewhere.

    Van Staden said his short-term request to the Government was not to impose any further increases in excise taxes on cigarettes in 2019, because that would simply make the non-tax-paying products even cheaper by comparison with legal products.

    LTP buys and processes most of SA’s tobacco crop from about 100 commercial farmers and about 150 emerging farmers. The industry is said to employ 10,000 farm workers with 35,000 dependents.

  • Price rises revealed

    Price rises revealed

    New data supplied by Health Canada reveals that tobacco companies have repeatedly hiked cigarette prices for several years while simultaneously fighting off federal and provincial tobacco tax increases, according to a press note by Physicians for a Smoke-Free-Canada.

    The price increases amount to more than C$16 per carton since 2013 and, going forward, they will represent over C$2 billion in ‘lost’ revenue annually to the federal and provincial governments, said the note, which appeared also under the imprimatur of Action on Smoking and Health, the Canadian Public Health Association and the Quebec Coalition for Tobacco Control. Since 2013, the additional revenue of the companies was said to have totalled C$4 billion.

    “The tobacco companies are playing Canadian finance ministers for dupes by fighting tobacco tax increases and pocketing billions in foregone tax revenue obtained through substantial price increases” said Les Hagen, executive director for Edmonton-based Action on Smoking and Health. “Federal and provincial governments are burdened with the enormous healthcare costs resulting from tobacco use and they should not allow tobacco companies to rob them of valuable revenue to defray these costs.

    “Finance ministers should respond with tobacco tax increases that will match or exceed industry price increases in their forthcoming 2019 budgets. Tobacco companies should not be allowed to cash in on their objectionable efforts to derail tobacco tax increases.”

  • Licensing shisha in Egypt

    Licensing shisha in Egypt

    Amendments made to Egypt’s public-shops law will require restaurants and cafés to obtain licenses to serve shisha, according to a Daily News Egypt story.

    The amendments were passed by Parliament on Monday after two hours of discussions.

    Article 26 of the law now stipulates that premises that serve food or drinks to the public will be able to offer shisha only if they obtain an EG£10,000 license.

    And article 27 requires all such premises to install internal and external surveillance cameras.

    According to the News, a recent study found that 81 percent of shisha smokers were spending about 10 percent of their incomes on daily shisha consumption.

    Additionally, the majority of people frequenting restaurants and cafés were found to be smoking shisha.

    Reportedly, the revenues of these businesses are mostly gained from shisha, which is always in high demand from both men and women.

  • Tax hike sought in Indonesia

    Tax hike sought in Indonesia

    Policy makers in Indonesia are reluctant to address the smoking issue to the point where they are defending the cigarette business, according to a story in The Jakarta Post quoting the chairman of the Indonesian Consumers’ Foundation (YLKI), Tulus Abadi.

    Tulus said that President Joko ‘Jokowi’ Widodo’s decision not to increase cigarette excise in 2019 betrayed his development agenda in which he and vice president Jusuf Kalla had vowed to double the tax between 2015 and 2019.

    “This decision is a terrible setback on excise policies,” Tulus told reporters at a press conference on the weekend, adding that the revenue from the excise was not comparable to the financial losses caused by smoking. “The state has failed to understand the true [point] of the excise.”

    The lack of tobacco control, Tulus said, was a major contributor to noncontagious diseases covered by the Health Care and Social Security Agency (BPJS Kesehatan), with the prevalence increasing to 1.8 percent in 2018 from 1.4 percent in 2014, according to the Basic Health Survey.

    The decision to keep the excise unchanged was ironic, he said, because the government had allocated 50 percent of the regional excise revenue to cover expenses incurred by BPJS Kesehatan, which was running at a deficit of Rp16.5 trillion (US$1.17 billion).

    That said, Jokowi has a consistent record of increasing cigarette excise, which has risen every year since he assumed office: by 8.7 percent in 2015, 11.3 percent in 2016, 10.5 percent in 2017, and 10.4 percent in 2018, according to Statistic Indonesia data compiled by the Institute for Development of Economics and Finance.

    Nevertheless, Tulus urged the government to increase the excise tax by 57 percent, because, he said, the accumulated increase since 2015 had reached only about 40 percent.

    Cigarette excise had contributed Rp153 trillion to state revenue in 2018, he said, but it could reach Rp350 trillion if the Government had a ‘firmer stance on its regulation’.

  • EU response co-ordinated

    EU response co-ordinated

    The European Anti-Fraud Office (OLAF) makes every effort to co-ordinate the EU’s fight against tobacco-products smuggling, the EU Commission said yesterday.

    The Commission was replying to a question from a Czech member of the EU Parliament who had questioned whether the high number of illicit cigarettes entering France should be principally a matter for the French authorities as the Commission had previously suggested.

    In a preamble to his question, Tomáš Zdechovský said that, in its response to parliamentary question E-003300-18 [see TR’s story of September 21, 2018: Going it alone], the Commission had confirmed that, ‘OLAF can bring significant added value by helping co-ordinate anti-smuggling operations’.

    However, in relation to the cigarettes smuggled from Algeria to France, it had stated ‘France has so far not requested OLAF’s assistance in this regard’.

    ‘It is estimated that the annual revenue losses to the EU due to cigarette smuggling amount to as much as €10 billion every year; France has the highest volume of illegal cigarettes in the EU, and OLAF has the unique investigative mandate to fight tobacco smuggling into the EU,’ Zdechovský said, before asking:

    ‘Given that the issue in France is precisely that of tobacco smuggling into the EU, should OLAF not be more proactive?’

    In reply, the Commission said that OLAF was proactive and made every effort to co-ordinate member states’ actions to fight the smuggling of tobacco products into the EU.

    ‘A new European Commission Action Plan on fighting illegal tobacco trade, published on 7 December 2018, addresses the increasing global dimension of tobacco smuggling by proposing a combination of targeted policy and enforcement initiatives, including actions by OLAF,’ the Commission said.

    ‘As regards cigarette smuggling from Algeria into France specifically, OLAF has informed the European Commission that it is in contact with the French customs authorities with a view to assessing the issue and contributing to their actions to counteract this illegal business.’

  • Healthy tobacco taxes

    Healthy tobacco taxes

    All residents of Kediri City, East Java, Indonesia, are due to be registered into a healthcare and social security (BPJS) system that will be funded entirely by excise taxes paid by the local cigarette manufacturer Gudang Garam, according to a Tempo story.

    “Every resident will own healthcare insurance by 2020,” Kediri City Healthcare Agency head Fauzan Adima was reported to have said.

    The Finance Ministry’s Decree No.222/PMK.07/2017 mandates that 30 percent of the excise income is to be allocated to the national health insurance (JKN) program.

    The Kediri City BPJS marketing assistant manager Budi Wusono Adi said the strategy taken by the city administration would fulfil the people’s need for affordable healthcare insurance.

  • Retail restrictions sought

    Retail restrictions sought

    A leading New Zealand-owned and operated vaping company, Alt, is supporting calls for tobacco to be removed from all dairies, according to a story at Voxy.co.nz.

    Alt New Zealand’s director, Jonathan Devery reportedly said that such a move would bring considerable health and security benefits.

    Devery said that dairy owners needn’t worry about losing income because ongoing hikes in tobacco tax and dwindling smoking rates were already contributing to lower retailer revenue.

    At the same time, vaping products, which were much better for society, were proving increasingly profitable for dairy owners.

    In recent days, dairy owners have reportedly raised concerns that a New Year rise in tobacco tax had put them at greater risk of theft.

    Meanwhile, the Maori public health organization Hapai Te Hauora has called on tobacco’s availability to be limited, noting that smokers trying to give up are more likely to relapse if a cigarette stockist is only a short distance away.

    Devery agrees. Although ramping up excise taxes would help toward achieving New Zealand’s Smoke Free 2025 goal, the Government needed to consider the availability of tobacco. Getting cigarettes out of corner dairies would be a great start.

    Additionally, Devery said that if the smoke-free goal was to be achieved, vaping products had to be readily available and advertised in a regulated and responsible manner.

    Alt was said to be looking forward to the Government this year amending the Smokefree Environments Act 1990, which, among other things, would help distinguish the considerably-safer vaping products from smoking products.