Category: Taxation

  • Excise tax rise in Georgia

    Excise tax rise in Georgia

    Cigarette prices in Georgia have risen by an average of 50 tetri (US$0.19) a pack following the introduction of a new tax code that came into force on January 1, according to a Georgia Today story.

    Since the beginning of the year, the excise tax on a pack of 20 filtered or unfiltered cigarettes has been set at 1.70 lari (100 tetri = 1 lari). Previously, unfiltered cigarettes were taxed at the rate of 60 tetri for a pack of 20.

    The tax code amendments have their supporters and opponents. The former hope that the increased excise tax will cut the number of smokers in the country.

    Tobacco importers on the other hand say the resulting price rises could increase the number of contraband cigarettes on the market.

    However, the head of the Parliament’s Health Committee Akaki Zoidze believes this is unlikely as contraband currently accounts for less than one percent of tobacco products on the market.

    He said he hoped the tax increase would “encourage” smokers to quit.

    The World Health Organization, he added, had calculated that 35,000 people could be saved from early death during the next 15 years, while the country’s economy would receive a 2.2 billion lari boost.

    The story mentioned also that the excise tax increase had been encouraged by the EU.

  • Don’t mention taxes

    Don’t mention taxes

    Organized criminals are targeting Wales with illicit cigarettes because of a lack of investment in enforcement, according to a BBC Online story quoting a senior investigator.

    Clive Jones of Powys Council Trading Standards said tobacco control strategies would be undermined unless central enforcement were introduced.

    New figures were said to show that about 150,000 illicit tobacco products had been seized in Wales since 2013.

    Jones said the threat was that Wales would become a dumping ground for criminals involved in the illegal trade in cigarettes – that criminals would see Wales as an open door.

    And this presented a challenge to the Welsh Government.

    “It’s great having tobacco control strategies but the enforcement arm of that needs to be in place, and if it’s not it completely undermines the wider strategy,” said Jones.

    Meanwhile, Suzanne Cass, chief executive of Ash Wales, said the Welsh Government should back the antismoking charity’s plan to tackle the illegal trade via a central communication and enforcement program.

    And Steve Wilkins, a former Dyfed-Powys police detective chief superintendent who is now anti-illegal trade operations director at Japan Tobacco International was quoted as saying that there were “vast amounts” to be made from illicit tobacco.

    “It is the commodity of choice for organised crime because the profits are high, the chances of getting caught are low and the actual sanctions are very, very low,” he said.

  • Farmers ‘barely surviving’

    Farmers ‘barely surviving’

    The Philippine Tobacco Growers’ Association (PTGA) yesterday expressed ‘grave concern’ about proposed increases in tobacco-excise taxes, according to a People’s Television story.

    The PTGA said the battery of tax increases was killing the local leaf industry.

    In a statement sent to the Philippine News Agency, the PTGA said cigarette taxes had gone up seven times in the past five years, something that had directly impacted leaf production and caused the displacement of a lot of farmers.

    “Higher prices have led to a lot of counterfeit cigarettes and these are coming mostly from China and do not use Philippine tobacco,” the PTGA added.

    According to data from the National Tobacco Administration, tobacco production went down from 68 million kg in 2013 to 48 million kg in 2017.

    The PTGA said that the local tobacco industry had paid about PHP126 billion to the Bureau of Internal Revenue in 2017 alone. But despite its enormous contribution to the Government’s coffers, tobacco farmers were barely surviving.

    The group said also that the increases in prices of tobacco products had contributed to a surge in inflation. ‘These cigarette prices have contributed to the spike in inflation to all-time highs,’ it said. ‘Our families are barely coping.’

  • Surge in illicit cigarettes

    Surge in illicit cigarettes

    The Government of Sri Lanka might have ‘lost’ Rs18 billion in cigarette tax revenue with a record, estimated 583 million illicit cigarettes having been smuggled into the country during 2017, according to a story in The Daily Mirror citing the findings of a new report.

    The surge in illicit cigarettes was said to have been driven by high taxes and the absence of a proper mechanism to combat illicit-cigarette inflows.

    The report, A Baseline Study on the Illicit Cigarette Market With the Resulting Tax Implications for Sri Lanka, was co-authored by a group of academics comprising Dr. S.N. Morais, Prof. S.S. Colombage and Dr. C.N. Wickramasinghe, and funded by an unnamed ‘private consultancy firm’.

    Morais said that Sri Lanka was becoming a hotspot for illicit cigarettes, which accounted for more than 15 percent of cigarette consumption in Sri Lanka, while Colombage added that a lower-than-projected revenue from cigarette taxes was an indicator of the existence of a massive illicit market. According to him, the realized budget revenue from cigarette taxes was 3.3 percent lower than had been forecast for most of the years between 2009 and 2017. “It is noteworthy that the actual value was lower than the forecast value in six out of nine years, indicating the existence of illicit trade,” he said.

    And he said that tax increases alone would not bring down cigarette consumption in Sri Lanka. “Although the weighted average excise tax rate rose by 192 percent, the sales of cigarettes declined only by 26 percent during the period 2010-2017,” he said.

    “Even the small reduction cannot be regarded as a decline in the overall smoking prevalence in the country, as smokers may have shifted to the illicit cigarette market, thereby offsetting the fall in legitimate cigarette sales.”

    Wickramasinghe said that illicit cigarette consumption was high among migrant communities and low-income consumers.

    In some places, the price of an illicit cigarette was 30 percent lower than that of a licit cigarette. However, in other locations, certain illicit brands were sold at a premium.

    Illicit cigarettes were sold also by mixing them with licit cigarettes, while charging the standard price. This happened because it was difficult for the average smoker to differentiate cigarettes by appearance, though there were differences in taste. In such cases, the traders earned higher profits because cheap, untaxed cigarettes could be sold at higher prices.

    Wickramasinghe pointed out that illicit cigarettes were smuggled into Sri Lanka to meet the demand created by migrant communities for cigarettes produced in their home countries. “These migrant communities have special distribution networks and large quantities of illicit cigarettes are reportedly marketed using online platforms operated in their languages,” he said.

  • Tax grab is well meant

    Tax grab is well meant

    The Philippines’ President Rodrigo R. Duterte has approved a proposal to raise excise taxes imposed on alcohol and tobacco products to fund the Government’s Universal Health Care (UHC) program, according to a story by The Philippine News Agency.

    “The chief executive likewise approved the proposal of the Department of Health and the Department of Finance to increase the excise tax on alcohol and tobacco products,” presidential spokesperson Salvador Panelo said in a statement.

    “This is a key public health measure to reduce deaths and disabilities due to tobacco and alcohol consumption and, at the same time, a revenue measure to fund the universal health care program,” he added.

    The Agency report said that in December last year, Finance Secretary Carlos Dominguez III had pushed for an increase in the current tobacco excise tax rates to levels that would be effective in curbing smoking and help supplement funds for the UHC program.

    In the same month, the House of Representatives approved House Bills 8677 and 8618, which sought to increase the tax on cigarettes and alcoholic drinks respectively.

    HB 8677 sought to increase tobacco excise taxes by PHP2.50 each year, from 2019 until 2022. Under the measure, tobacco excise is set to be raised to PHP37.50 per pack in July 2019, to PHP40 in 2020, to PHP42.50 in 2021, and to PHP45.00 in 2022. Tobacco excise would be raised by four percent annually, each July, starting in 2023.

    In November last year, the Bicameral Conference Committee approved the consolidated version of the UHC bill which aims to provide all-inclusive health coverage for Filipinos.

    Duterte endorsed the UHC bill among his priority measures during his state of the nation address on July 23, 2018.

  • EU system on right track

    EU system on right track

    The EU Commission has said that the EU traceability system for tobacco products is fully compliant with the World Health Organization’s Protocol to Eliminate Illicit Trade in Tobacco Products (Protocol).

    The Commission was replying to two questions posed by the Romanian member of the EU Parliament, Cristian-Silviu Buşoi.

    In a preamble to his questions, Buşoi said that during the eighth session of the Conference of the Parties to the WHO’s Framework Convention on Tobacco Control (COP8) and the first meeting of the parties to the Protocol (MOP1) held in Geneva in October 2018, WHO Spokesperson Dr. Stella Bialou had justified the non-compliance of the EU’s Tobacco Products Directive (TPD) in respect of tobacco tracking and tracing because the adoption of the TPD had preceded the ratification of the Protocol.

    ‘Moreover, on 9 June 2016, Parliament voted to ratify the Protocol and all member states voted in favour in the Council, leading to its official ratification by the EU on the 24 June 2016,’ he said, before asking:

    1. ‘How and when will the Commission remedy this discrepancy, now that the Protocol has been ratified by the EU?
    2. ‘How is the Commission addressing the situation of the remaining 15 member states that have not ratified the WHO Protocol individually?’

    In reply to the first question, the Commission said that the EU traceability system for tobacco products established under the TPD was fully compliant with the Protocol established under the WHO’s Framework Convention on Tobacco Control (FCTC).

    ‘The EU was involved in negotiating the FCTC Protocol, adopted in 2012,’ the Commission said. ‘The FCTC Protocol (in particular Article 8) was taken into account when the EU adopted its system in 2014. The EU system, which will be in place by 20 May 2019, is based on Article 15 TPD and complemented by Commission Implementing Regulation (EU) 2018/574 and Commission Delegated Regulation (EU) 2018/573 adopted in December 2017, which following the positive scrutiny of the latter act by the co-legislators entered into force on 6 May 2018.

    ‘Member states’ competent authorities and the Commission exercise full control over this system. Several measures ensure the full compliance with the FCTC Protocol, notably: independent generation of unique identifiers, independent storage of traceability data with real time visibility for enforcement purposes, as well as high density and standardisation of reporting events in terms of time and content. The Commission sees no reason to introduce any changes to the design of the EU system.’

    In answer to the second question, the Commission said that member states had unanimously supported the ratification of the Protocol by the EU, for matters falling under EU competence.

    ‘As for matters falling under national competence, to date 11 member states have ratified the Protocol,’ it said. ‘There are national procedures ongoing in the remaining member states. The Commission regularly organises meetings with national experts to support the member states in ratifying and implementing the Protocol.’

  • Tax hike in Qatar

    Tax hike in Qatar

    The retail prices of tobacco products and sugary drinks have increased in Qatar following the imposition of new excise taxes, according to a story in The Gulf Times.

    The new excise tax rates, which came into effect on Tuesday, have been set at 100 percent for tobacco and energy drinks, and at 50 percent for carbonated drinks.

    A pack of Marlboro cigarettes that used to sell for QR11 now costs QR22, while the price for a pack of Pall Mall increased from QR5 to QR10, according to the Times citing an official price matrix.

    A Doha-based store owner was said to have told the Times that most of his customers who are smokers had been complaining about the high prices, but that there was nothing that could be done. “These are new prices sanctioned by the government and there is nothing we could do but to comply with the new policy,” he said.

    In a general awareness workshop, the Tax Department had previously defined excise tax as ‘a form of indirect tax levied on specific goods that are deemed harmful to human health or the environment’. ‘The intent of excise tax is to reduce consumption of such goods, while also raising revenues for the government that can be spent on public services,’ it said.

  • Taxes up in Morocco

    Taxes up in Morocco

    New, higher cigarette prices took effect in Morocco from yesterday after the imposition of an increase in the domestic consumption tax on some cigarette brands, according to a story in Morocco World News.

    Under Article 5 of the 2019 Finance Bill, the minimum tax rate was increased from MAD567 to MAD630 per 1,000 cigarettes, while the minimum tax burden was increased from 53.6 percent to 58 percent.

    Morocco collected MAD10.48 billion from its domestic consumption tax last year, up from MAD9.86 billion in 2016, according to the country’s customs administration.

    And in October, the Economics Minister Mohamed Benchaaboun said that the latest increase in taxes on tobacco would generate additional revenue in 2019 estimated at MAD1.2 billion.

    The 2019 Finance Bill included also a clause raising the domestic consumption taxes on shisha tobacco from MAD350 to MAD450 per kg.

    The Government was given some tobacco-industry support for its decision to increase the tax on cigarettes.

    However, some tobacco companies reportedly suggested that the 2019 Finance Bill would help support the illegal trade in tobacco products.

  • New Year celebrations

    New Year celebrations

    Smokers in New Zealand were hit in their pockets from yesterday with the introduction of a 10 percent tobacco excise tax increase, according to a Television New Zealand story.

    The increase will push the price of a 25-piece pack of cigarettes toward NZ$40, nearly four times the 2006 price of NZ$11.95.

    The move is purported to be aimed at reducing the incidence of smoking, which is now believed to be about 16 percent.

    Since January 2010, the Government has increased tobacco excise by at least CPI (consumer price index) plus 10 percent each year; so the tax on a single cigarette has gone from 30 cents to 82 cents since 2009.

    The current series of tax increases is scheduled to end in 2020.

  • Illegal trade reduced

    Illegal trade reduced

    Pakistan is the ‘top’ country in Asia when it comes to the illegal cigarette trade, according to a story in The News citing figures from a new report.
    But the good news is that the consumption of illicit cigarettes declined in the country in 2017.
    The country’s annual illegal trade in cigarettes is estimated by Oxford Economics at 32.6 billion cigarettes, or 41.9 percent of the total cigarette trade.
    The Oxford Economics report, Asia Illicit Tobacco Indicator 2017: Pakistan, was made available to the media by Philip Morris International on Friday.
    It said that Pakistan was losing more than Rs50 billion in taxes to the illegal trade in the country.
    Total consumption (licit and illicit) was estimated at 77.8 billion cigarettes in 2017, down by 10.3 percent on that of 2016. Of this total, an estimated 58.0 percent was licit domestic cigarettes, 0.1 percent was licit non-domestic cigarettes, and 41.9 percent was illicit cigarettes.
    Domestic illicit cigarettes accounted for nearly three-quarters of all illicit cigarettes consumed in 2017, the data showed.
    The consumption of illicit cigarettes declined by an estimated 14.0 percent in 2017 to 32.6 billion cigarettes, underpinned by an 11.4 percent decline in the consumption of domestic illicit cigarettes and a 20.5 percent fall in the consumption of non-domestic illicit cigarettes. ‘This is the first time since 2013 that illicit consumption has fallen in Pakistan,’ the report said.
    The decline in the consumption of illicit cigarettes was said to have coincided with a series of regulatory and enforcement initiatives.
    ‘In January 2017, the Federal Board of Revenue (FRB) constituted a joint committee for the monitoring, vigilance, and scrutiny of the cigarette/tobacco sector in response to the rise in illicit consumption, and in recognition of the links between tobacco smuggling and financing terrorism,’ the News reported.
    ‘The committee, known as the Inland Revenue Enforcement Network (IREN), was tasked with monitoring and developing strategies to combat the illegal cigarette trade. In the first year of operation, IREN seizures amounted to 1.63 billion non-duty-paid cigarettes and raw tobacco. In July 2017, the FED (federal excise duty) was restructured with the introduction of a third low-tax-tier in an attempt to encourage producers of illicit tobacco to formalise and become better regulated.’