Category: Taxation

  • Call for lower excise taxes

    Call for lower excise taxes

    The New Zealand member of parliament and ACT party leader David Seymour has called for tobacco-product excise taxes to be lowered, according to a story by Sam Carran for Newstalk ZB.

    Seymour says that the doubling of such taxes during the past five years has led to an increase in crimes against retailers.

    Nearly 500 such robberies committed during the past year were said to have been related to tobacco.

    “People who are doing these robberies are the scum of the earth and they should all be hung, drawn and quartered or whatever the maximum is allowed under the Crimes Act as it stands,” Seymour added.

  • Mighty tax case closed

    Mighty tax case closed

    The Philippines’ government is expected to earn about P40 billion from a compromise deal over the tax liabilities of Mighty Corporation, according to a story in The Manila Bulletin quoting the Justice Secretary Vitaliano Aguirre II.

    Aguirre said he did know the exact figure but that it was about P40 billion.

    And because of the deal, the Bureau of Internal Revenue had withdrawn three tax evasion complaints it had filed with the Department of Justice against the tobacco company.

    Under the Philippines’ National Internal Revenue Code and other tax laws, settling a tax case was allowed, and so the case was closed and the government richer by P40 billion, Aguirre said.

    The settlement agreement over the tax liabilities was reached after Japan Tobacco Inc. (JT) acquired Mighty Corporation in September.

  • Latvia sucks in illicits

    Latvia sucks in illicits

    Contraband products account for 25.2 percent of Latvia’s cigarette market, according to a story in The Baltic Course citing a report by Latvia’s main information agency, LETA, which, in turn, was based on a survey by AC Nielsen.

    Latvia is said to have the highest contraband-cigarette activity of the Baltic states. The share of contraband on Lithuania’s cigarette market, for instance, is reckoned to have been 19.8 percent during the third quarter of this year.

    Within Latvia, the highest share of contraband cigarettes, 52 percent, was recorded in Daugavpils, in the southeast of the country close to its borders with Belarus and Russia.

    In the Latvian capital Riga, the share of contraband cigarettes was 23 percent.

    The chairman of the Latvian Chamber of Commerce and Industry, Janis Endzins, said that despite the efforts of law enforcement agencies, which seized millions of contraband cigarettes almost every day, Latvia still had the highest share of cigarette contraband among EU member states.

    And Endzins added that an ill-considered excise-tax policy was likely to boost contraband instead of bringing additional revenue to the state budget.

    Belarus is said to be the source of 66.5 percent of the contraband cigarettes entering Latvia, while Russia is in second place with 10.7 percent.

  • Zambia attracts production

    Zambia attracts production

    British American Tobacco Zambia (BATZ) is seeking shareholder approval to acquire a US$15 million revolving loan facility from BATIF Dollar Limited to finance the construction of a cigarette manufacturing plant in Zambia, according to a times of Zambia story relayed by the TMA.

    BATZ, which has been sourcing 95 percent of its cigarettes from BAT Kenya and the remainder from BAT South Africa, believes that the current excise tax regime favors domestic manufacturers over importers.

    In a filing with the Lusaka Securities Exchange, BATZ said the board was considering launching local production in the country, ‘which would not only reduce the tax burden and bring about a fundamental change in the long term financial position of the company but in addition create employment for the locals’.

    On Monday, the Zambia Daily Mail reported that the Zambia Association of Manufacturers (ZAM) had welcomed a rise in duties on unmanufactured tobacco and tobacco refuse.

    The association was quoted as having said that the increase, from 15 percent to 25 percent, would encourage value addition to the commodity and support farmers.

    ZAM’s CEO Chipego Zulu commended the government for encouraging the processing of tobacco locally as a move that would benefit tobacco farmers.

    She said the move would encourage also the production of cigarettes and boost the manufacturing industry.

  • Children miss out

    Children miss out

    The US Congress failed to extend funding for the Children’s Health Insurance Program (CHIP) by the October 1 deadline, a program that is supported by tobacco taxes, according to a halfwheel.com story relayed by the TMA.

    CHIP is a Federal program that was expanded in 2009 with funding coming from federal excise tax increases on tobacco products.

    The tax increases remain in effect.

    The 2009 expansion levied a federal excise tax of 52.75 percent on cigars, capped at 40.26 cents per piece, on every cigar imported to the US, and increased the federal tax on cigarettes from 39 cents to $1 per pack.

    “Tax itself is statute,” said Daniel Trope, director of federal government affairs for the International Premium Cigar and Pipe Retailers Association.

    “If anything, (the money will) just go to general treasury but the tax remains in perpetuity.”

  • Duty-rise welcomed

    Duty-rise welcomed

    The Zambia Association of Manufacturers (ZAM) has welcomed a rise in duties on unmanufactured tobacco and tobacco refuse, according to a story in the Zambia Daily Mail.

    The association says that the increase, from 15 percent to 25 percent, will encourage value addition to the commodity and support farmers.

    ZAM’s CEO Chipego Zulu commended the government for encouraging the processing of tobacco locally as a move that would benefit tobacco farmers.

    She said the move would encourage also the production of cigarettes and boost the manufacturing industry.

  • Well-off using illegal trade

    Well-off using illegal trade

    Forty-eight percent of UK smokers earning less than £6,000 a year buy tobacco from illicit sources, according to the report of a poll commissioned in June by the TMA, the trade association for the UK’s tobacco industry.

    More surprisingly perhaps, 40 percent of smokers who earned more than £60,000 also buy tobacco from illicit sources.

    The TMA said that the June poll, conducted nation-wide among 12,065 adult smokers, was commissioned so as to help it understand smokers’ ‘awareness, behaviour and attitudes towards illicit tobacco’.

    The poll’s questions were said to have been devised after the receipt of input from HM Revenue and Customs and other stakeholders.

    Among the key findings: 72.5 percent of UK smokers buy tobacco from sources where UK taxes aren’t paid, including illicit tobacco and that from abroad, and overall 41 percent of smokers buy tobacco from illicit tobacco sources.

    Eighty-eight percent of smokers think that tobacco prices are too high, while two percent think they are too low.

    Twelve percent of smokers who knew of illicit tobacco in their local area reported it to the authorities, down from 20 percent in 2016.

    In announcing the poll’s findings, the TMA said tobacco on which UK taxes was not paid was a major issue for law enforcement and taxpayers, with £3 billion of tax lost to the illegal trade and cross border shopping in 2015-16.

    The link between high tobacco taxes and the illicit market was acknowledged by many leading independent institutions including the Royal United Services Institute, the TMA said, before adding that government taxes accounted for up to 90 percent of the price of a pack of cigarettes in the UK.

    ‘The regulatory changes to the UK tobacco market this year – the ban on small packs and the introduction of plain packaging – may make the problem worse, with 45 percent of smokers saying they are more likely to purchase illicit tobacco because of the changes,’ it said. ‘Moreover, smokers are increasingly buying larger amounts of untaxed tobacco, with 53 percent saying they buy 200 cigarettes or more from non-taxed sources…

    ‘Overall this survey confirms that the government’s policies do not have the support of smokers and are likely to be a large contributing factor to the high level of illegal tobacco in the UK.’

    Responding to this year’s findings, TMA director general, Giles Roca, said the results revealed the true extent of how the government’s high tax policy, in creating some of the highest tobacco prices in Europe, had continued to push smokers to buy from non-UK-duty-paid and illicit sources.

    “High taxes have cost the treasury billions of pounds in lost revenues whilst giving a boost to the criminals who are behind the illegal trade,” he said. “There is also worrying evidence that children are increasingly accessing tobacco from these illicit sources.

    “The regulations that came fully into force this year banning small tobacco packs and introducing plain packaging are making the problem worse by pushing smokers towards the illicit market rather than encouraging them to quit.

    “There is a real risk that the problem could be made worse if the government decides to increase tobacco duty for a second time in nine months in the upcoming budget. These findings suggest the government needs to completely re-think its tobacco taxation policy.”

  • Mighty muddle

    Mighty muddle

    After accusing Mighty Corp. of tax evasion over the alleged use of fake tax stamps, the government finds itself in a position where it is unable to cope with orders for such stamps from Mighty’s new owner, the Japan Tobacco Group, according to a story in The Philippine Star quoting ‘sources’.

    JTI Philippines is facing this stumbling block just weeks after completing its P45-billion buyout of the Bulacan-based cigarette company because it has been unable to obtain enough cigarette tax stamps from the APO Production Unit, which is in charge of the supply and delivery of tax stamps.

    During the past two weeks, JTI is thought to have paid P6 billion to acquire roughly 180 million cigarette tax stamps but has received only 25 million.

    Without tax stamps, JTI would not be able to sell its cigarettes.

  • Stocking up in the UAE

    Stocking up in the UAE

    Grocery stores and smokers in the United Arab Emirates are stockpiling cigarettes to put off the impact of a new sales tax that is due to come into effect next month and that will increase prices by 100 percent, according to a story in The Khaleej Times.

    Some smokers are buying and taking away as many cartons as they can, while others are making advance payments so that grocery stores reserve cigarettes for them.

    At the same time, the growing demand from customers is compelling the grocery stores to make up-front payments to cigarette distributors.

    Grocery-store owners reportedly told the Khaleej Times that because they were having to pay up front, they were having to ask their regular customers to pay in advance and collect their cigarettes a few days later.

    One problem is that suppliers are limiting the number of cigarettes they reserve for grocery stores.

  • Cyprus to tax vapor

    Cyprus to tax vapor

    Cyprus’ House Plenum on Friday passed a bill imposing a tax on e-liquids and heat-not-burn sticks, according to a story in The Cyprus Mail.

    The law introduces a new category called ‘liquid for electronic cigarette use’ that carries a consumption tax of €0.12 per ml of liquid.

    Additionally, the bill provides for heat-not-burn products, which are expected soon to be imported to Cyprus, to carry a consumption tax of €150 per kg.

    The bill was tabled by the ruling Disy party [the Democratic Rally] and passed by 26 votes to 17.

    Akel MP Aristos Damianou criticized the government for introducing more taxes, saying that it was only on Monday [September 18] that the finance minister had said no new taxes would be imposed, and yet a bill to do just that was before parliament.

    Damianou said that though there had been a steady increase in the consumption of cigars, there had been no increase in their consumption tax.

    Rather, taxes were being imposed on electronic cigarettes that, despite their containing products that were bad for people’s health, could potentially help people quit smoking.

    The Green MP Giorgos Perdikis said that the revenue from the new taxes should be put towards a special fund to campaign against smoking.