Category: Taxation

  • World Bank Urges Laos to Increase Taxes

    World Bank Urges Laos to Increase Taxes

    Image: Skórzewiak

    The World Bank has urged Laos to raise its value-added tax rate and increase taxes on cigarettes and alcohol to help address high inflation and currency depreciation, according to Radio Free Asia.

    Alex Kremer, the World Bank’s representative in Laos, said in a report last month that the government should spend more money on healthcare and education to set a foundation for future development.

    Laos’ economy has struggled with rapidly rising prices, low foreign investment and public debt that could increase to 125 percent of GDP in 2024. The country’s debt reached $18.7 billion by the end of 2022. Over half the debt is owed to China.

    Kremer said the debt has destabilized the country’s macroeconomy and slowed economic growth.

  • Japan Mulls Equal Taxes for Cigarettes and THPs

    Japan Mulls Equal Taxes for Cigarettes and THPs

    Image: Ned Snowman

    Japan’s government presented a proposal to the executive committee of the Liberal Democratic Party’s Taxation Research Committee to raise taxes on heated-tobacco products, bringing them to the same level as cigarettes, reports Yomiuri. The increased taxes are to be used to help strengthen defense capabilities. The proposal will be included in the ruling party’s tax reform outline expected to be compiled within the week.

    Taxes on heated-tobacco products are currently about 30 percent lower than the taxes on combustible cigarettes. Some members of the Liberal Democratic Party as well as cigarette manufacturers have argued that the tax rate difference should remain the same because “heated-tobacco products are less harmful to health.”

    The Cabinet approved a tax reform outline last year that stipulates the tobacco tax will increase by “the equivalent of ¥3 ($0.02) per cigarette” as part of the defense tax increase. A tax revenue increase of about ¥200 billion in expected.

    “After consulting with Prime Minister Kishida, we have decided not to make a decision this year,” said Yoichi Miyazawa, chairman of the Liberal Democratic Party’s tax committee, regarding the start of the defense tax increase.

  • Finland: Smoke-Free Tax Plans Draw Fire

    Finland: Smoke-Free Tax Plans Draw Fire

    Photo: Marko Hannula

    The Finnish government’s recent proposal to increase taxes on nicotine pouches and vape liquids has drawn criticism from the World Vapers’ Alliance (WVA). The current plan would increase the price of one nicotine pouch box by approximately €2.50 ($2.74).

    This move, which aims to bring smokeless nicotine products under tobacco taxation, is a significant step backwards in harm reduction efforts, according to the consumer group.

    “Finland’s plan to increase taxes on less harmful nicotine alternatives is deeply concerning. Not only does this reduce the price differential between deadly cigarettes and safer alternatives, but it also directly undermines public health goals. By making products like nicotine pouches and vape liquids more expensive, we risk discouraging smokers from switching to these less harmful alternatives,” said WVA Director Michael Landl in a statement.

    The proposal, which seeks to amend the law on tobacco taxation, will encompass smoke-free nicotine products, including nicotine pouches and vape liquids. The WVA warns that such tax increases will disproportionately impact low-income groups, who statistically exhibit higher smoking rates.

    “Imposing higher taxes on harm reduction products hits the most vulnerable groups the hardest. These are the same groups with the highest smoking rates. Instead of providing them with affordable alternatives to quit smoking, the government is pushing them back to the more harmful habit. This move by the Finnish government is a step in the wrong direction that ignores public health benefits and deepens social inequalities,” said Landl.

    The WVA suggested that the Finnish lawmakers don’t need to look far for successful examples of harm reduction. Sweden is on track to become the first smoke-free country because of its progressive harm reduction policies. Earlier this year, Sweden announced a program of lowering tax on snus and nicotine pouches while significantly raising cigarette tax.

  • U.K. Mulls Vape Tax

    U.K. Mulls Vape Tax

    Image: Margo_Alexa

    U.K. ministers are considering a new vapor tax as part of the move to create a “smoke-free generation” that would also include a gradual total ban on smoking, according to The Guardian.

    Documents that were published along with Rishi Sunak’s first king’s speech show that an eight-week consultation on smoking and vaping is planned and will “explore a new duty” on vapor products.

    There is an “important balance” that needs to be met to make sure cigarettes are taxed higher than vapes, The Guardian noted, citing Downing Street.

    Ministers plan to introduce the new tobacco and vapes bill next month. It will include tighter restrictions on vaping and phase out the sale of cigarettes, making it so that children currently aged 14 or younger will never legally be able to purchase the products.

  • Ontario to Double Vaping Tax

    Ontario to Double Vaping Tax

    Image: JHVEPhoto

    Ontario, in partnership with Canada’s national government, will double the tax on all vaping products sold in the province.

    The federal/provincial tax partnership scheme that was announced in 2022 allows provinces to double the current federal vape tax and keep half the proceeds, according to Vaping360.

    The Canadian Vaping Association (CVA) urged the federal government to reconsider its proposal to impose an additional provincial levy, as this would effectively double the already substantial tax burden. “The CVA suggests a more equitable approach where the federal government shares the revenue generated by the current levy with the provinces,” the industry group wrote in a statement.

    “With the introduction of the excise tax, depending on product type, vape products are now almost as expensive as cigarettes despite the significant reduction in risk,” the statement says.

    The CVA cautioned that the increased tax may lead to more illicit trade. “Legal businesses will find it nearly impossible to compete with the unregulated market that remains largely unchecked. The consequence of such punitive taxation will be widespread business closures, significant job losses and an increase in criminal activity.”

    “The CVA encourages the province to leverage its negotiating influence with the federal government to establish a fair revenue-sharing framework for the existing tax revenue. Preserving the regulated market, rather than destroying it, will lead to higher tax revenues. The additional revenue generated can be used by the province to increase enforcement resources and support educational programs for youth,” said Darryl Tempest, government relations counsel to the CVA.                     

  • Egypt Approves New Cigarette VAT

    Egypt Approves New Cigarette VAT

    Photo: alexlmx

    Egypt will impose a new value-added tax of EGP0.50 ($0.02) on locally sold tobacco products, reports Ahram Online.

    On Oct. 29, the House of Representatives approved an amendment to the 2016 VAT law to allow for the new duty, which will apply to both “hot” tobacco (cigarettes) and “liquid” tobacco (vapes), according to Fakhri El-Fiqi, head of the House’s Planning and Budget Committee.

    Egypt’s tobacco market has been in turmoil in recent months, with consumers facing cigarette shortages and price hikes, among other challenges.

    “The new amendment will also encourage tobacco companies to increase production in a way that shall stem the rise in cigarette prices and satisfy consumers,” said El-Fiqi, who predicted the next tax would generate up to EGP8 billion in revenues for the state budget.

    Some lawmakers praised the measure as method to discourage smoking in line with World Health Organization recommendations.

    “There is no question that the hike in cigarette prices will push more citizens, particularly young people, to give up smoking,” said Hesham El-Hosary, chairman of the House’s Agriculture and Irrigation Committee.

    Despite the recently announced tax hike, cigarettes in Egypt are still cheap compared to other countries. In France, for example, some brands of cigarettes sells for the equivalent of EGP600 per pack, according to Ayman Abul-Ela, deputy chairman of the House’s Human Rights Committee.

  • Cigarette Production Plunges in Pakistan

    Cigarette Production Plunges in Pakistan

    Photo: hassan

    Tobacco companies in Pakistan produced 43.9 billion cigarettes in 2022-2023, down from 64.7 billion in the previous fiscal year, reports The News International, citing figures from the Federal Board of Revenue’s (FBR) track-and-trace system.

    The country’s leading manufacturers, Pakistan Tobacco Co. and Philip Morris International, suffered year-to-year production declines of 32 percent and 39 percent, respectively. The production of Khyber Tobacco, by contrast, jumped 48 percent in the most recent financial year.

    The FBR collected tobacco revenues of PKR62.9 billion ($224.3 million) from July to September this year, compared with revenues of PKR177.7 billion in the comparable 2022 quarter.

    The FBR undertook 1,447 “actions of enforcement and seizure with confiscation” during the most recent financial year, according to FBR Project Director of Track and Trace Zaheer Qureshi

    The government is reportedly exploring strategies to boost revenue as part of an anticipated mini-budget in December.

    During a discussion on tobacco taxes, FBR officials attributed lamented the challenges posed by a limited workforce, logistical hurdles and an undocumented economy.

  • Netherlands to Tax E-cigarettes

    Netherlands to Tax E-cigarettes

    Photo: dbvirago

    Dutch lawmakers on Oct. 26 voted for a motion to introduce a tax on vapor products, reports Dutch News. The move follows earlier reports that the Netherlands would not impose such a levy prior to the elections scheduled for November.

    The government had been planning to wait until the introduction of Europe-wide legislation but given that is unlikely to happen before 2026, ministers agreed to take unilateral measures, if that is what MPs wanted.

    One in five Dutch youngsters under the age of 25 uses e-cigarettes, and 70 percent of vapers also smoke tobacco cigarettes, according to the Trimbos addiction institute.

    The 18 age limit for using vapes is also widely flouted and internet sales have flourished, De Telegraaf reported earlier this month.

     Vaping is cheaper than smoking in the Netherlands, where a pack of cigarettes now retails for around €11 ($11.64). An e-cigarette with the equivalent of two packets of cigarettes in terms of nicotine costs around €6.

  • Portugal to Increase Liquid Tax

    Portugal to Increase Liquid Tax

    Photo: alexlmx

    The government of Portugal wants to increase excise taxes on e-liquids in 2024. Nicotine e-liquids will have an excise tax increase of 4 percent, up to €0.351 ($0.373) per milliliter, and nicotine-free e-liquids will be subject to a €0.175/milliliter excise tax.

    Nicotine-containing and nicotine-free e-liquids will also be subject to a minimum tax corresponding to 25 percent and 12.5 percent of the tax applicable to traditional cigarettes, respectively.

    “Increasing the taxation of e-liquids in such a way will make vaping a less attractive option to consume nicotine and prevent low[-income] and middle-income groups from accessing the products,” said World Vapers Alliance Community Manager Alberto Gomez Hernande in a statement.

    “It risks pushing vapers back to smoking and preventing smokers from switching due to affordability reasons. Portugal should follow the steps of countries that are successfully reducing smoking rates by encouraging smokers to switch, such as the United Kingdom and Sweden; instead, Portugal has the highest excise tax rate on vaping products in the EU.”

    “The Portuguese government should follow a risk-based approach to the taxation of e-liquids,” said Hernandez. “Since the risk of vaping is 95 percent lower, taxes should be 95 percent lower too.”

    “If Portugal wants to meet the goals proposed in its National Plan Against Cancer and the European Cancer Plan, it needs to keep alternatives to smoking available and affordable,” Hernandez said. “Sweden is becoming the first smoke-free country in the world this year while Portugal is taking decisions in the opposite direction.”

    In related news, Portugal will delay implementation of the EU Tobacco Directive and proposed legislation by Portuguese government that would ban flavored heated-tobacco products. The ban was supposed to go into effect Oct. 23, 2023, but will be delayed in Portugal until 2024, according to 2Firsts.

  • Netherlands: No Vapor Tax Before Elections

    Netherlands: No Vapor Tax Before Elections

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    The Netherlands will not impose an excise tax on vapor products before the November 2023 elections, reports DutchNews.nl, citing De Telegraaf.

    The news source added that even if the Netherlands received EU approval to impose a vapor product excise tax, the process would take several years to complete.

    Although this current government did not work toward creating a vapor product excise tax, Junior Health Minister Maarten van Ooijen said that he would encourage the next cabinet to move ahead on a “national tax on e-cigarettes.” Van Ooijen added that such a tax would be “in the interests of public health.”

    High cigarette prices have assisted smokers to move toward vapor products in recent years. However, the current cabinet focused on prohibiting flavored e-liquids and online vapor product sales to combat rising youth rates of vapor product usage.

    “We need to take action against vapes as soon as possible to protect our children, as other EU countries have done,” Van Ooijen said.

    The EU is expected to revise its Tobacco Products Directive in 2025.