Category: Taxation

  • Illegal trade targeted

    Illegal trade targeted

    The Brazilian Institute of Competitive Ethics and the City of São Paulo have launched a movement to combat smuggling and the sale of counterfeit products, according to a note posted on the US Center for Regulatory Effectiveness’ (CRE) website.

    The goal is to attract to the movement Brazil’s largest cities, where such illegal trade is strong.

    The CRE story said that, in Brazil, the illegal market ‘generates a loss of R$49 billion (US$16 billion) in tax revenue each year, according to a survey by the National Fund Against Piracy and Illegality’.

    The movement’s plan, prepared in partnership with business entities, is said to provide for integrated action by federal, state and municipal bodies, and the creation of a committee charged with outlining actions to combat the illegal activities.

    Sixteen areas of the economy highly affected by smuggling and counterfeiting have already been identified.

    One, of course, is the cigarette industry. “In addition to currency evasion, this problem increases unemployment,” Liel Miranda, president of Souza Cruz, was quoted as saying.

    Smuggled cigarettes are said to account for 41 percent of the tobacco market in Brazil, which has the second largest smuggled sector after Malaysia, with 51 percent.

  • Costs taxing cheroot makers

    Costs taxing cheroot makers

    Cheroots, previously a staple of Myanmar’s smokers, are close to extinction as manufacturers struggle with high taxes, high production costs and stiff competition from imported and local cigarettes, according to a story by Khin Su Wai for the Myanmar Times.

    Nowadays, cheroots were found only in two out of a hundred tea shops in the country, cheroot-manufacturer Ko Hlaing Zayar Oo, Shwe Su, was quoted as saying.

    His output during the past three years has dropped to 60 baskets (one basket contains 1300 cheroots) per month from a high of 200 baskets five years ago.

    Ko Hlaing Zayar Oo noted also that the price of the basic materials for cheroot production, tobacco stalks and tobacco leaves, had risen respectively from K3,000 per viss (one viss is about 1.6 kg) to K8,000 per viss, and from K2,500 per viss to K3,500 per viss.

    He said the piece rates for the women who manually rolled the cheroots had risen to K400 for a hundred cheroots, though it was not stated what those rates were previously. Each of his workers can produce 700-1,000 cheroots per day.

    Cheroot production started in Myanmar during the reign of King Shinphyushin, who ruled between 1763 and 1776.

    And at their peak, a few decades ago, big cheroot manufacturers could produce up to six million a month, but their production declined by 50 percent last year.

    Cheroot manufacturers complained about the several taxes they have to pay: commercial tax, special tax and profit tax.

    U Khin Mg Win, who manufactures Kyae Ni cheroots in Oktwin in the Pegu division, said that last year he paid taxes amounting to K30 million and that this year he expected to pay K80 million.

    Meanwhile, Daw Khin San Hlaing, secretary for the Myanmar Cheroot Production and Distribution Association, reportedly told The Myanmar Times that the government should help cheroot makers improve leaf production efficiencies and reduce cheroot production costs.

    Daw Khin San Hlaing called on the government also to reduce the taxes imposed on cheroots and to help producers explore export markets.

  • Cigarette price matters

    Cigarette price matters

    Researchers at Imperial College London have found an association between infant mortality rates and cigarette price differentials, according to a EurekAlert story citing a new study.

    The authors were quoted as saying that eliminating budget cigarettes from the market might help to reduce infant deaths globally.

    “Thanks to tax and price control measures, cigarettes in EU countries are more expensive than ever before,” said Dr. Filippos Filippidis, of Imperial’s School of Public Health and the lead author of the study. “However, the tobacco industry is good at finding loopholes to ensure that budget cigarettes remain available. In this study, we found that the availability of budget cigarettes is associated with more infant deaths.”

    The study, published yesterday in the journal JAMA Pediatrics, analysed nearly 54 million births across 23 EU countries from 2004 to 2014. The researchers obtained data on cigarette prices over this period and examined whether differences between average priced and budget cigarettes was linked to infant mortality rates.

    And they found that during the 10 years under review, overall infant mortality declined in all countries from 4.4 deaths per 1,000 births in 2004 to 3.5 deaths per 1,000 births in 2014.

    The cost of average priced cigarettes increased during this time in all the countries studied. The difference between average-priced and budget cigarettes varied from 12.8 percent to 26.0 percent over the study period.

    The authors said that though EU governments had made cigarettes more expensive by increasing taxes, tobacco companies had responded with differential pricing strategies, where tax increases were loaded onto premium brands. This caused a price gap between higher and lower priced cigarettes that gave smokers the option to switch to cheaper products, making tax increases less effective.

  • Exhibitor numbers a record

    Exhibitor numbers a record

    A record number of exhibitors have registered for the TFWA World Exhibition and Conference, which is due to be held at the Palais des Festivals, Cannes, France, on October 1-6.

    Five-hundred-and-fifteen companies have registered so far, up 4.7 percent on last year’s registrations.

    Sixty-one exhibitors are said to new or returning after a short absence.

    The Cannes event will also see the debut of the TFWA Digital Village, an exhibition that, the organisers say, will occupy 840 square metres of prime floor space at Gare Maritime on October 4-6 inclusive. Thirty exhibitors will demonstrate how new technology can be utilised in duty free and travel retail.

    Visitors to the event will be able to make use of a new geo-localisation app that will allow them to identify where they are on a 3D interactive floor plan and to be guided along a route to a stand of their choice. Delegates will select the exhibitors they are interested in prior to the event and record them in a visit folder to be accessed on site.

    To help exhibitors maximise their impact at the exhibition, the TFWA Product Showcase, which is now open at www.tfwaproductshowcase.com, allows exhibitors to profile and promote their products online.

    More information is available at: www.tfwa.com.

  • Export tax withdrawn

    Export tax withdrawn

    Bangladesh’s National Board of Revenue (NBR) has withdrawn tobacco-product export-duty in respect of factories located within the country’s export processing zones (EPZ), sparking criticisms among anti-tobacco campaigners, according to a story in The New Age.

    The board has issued a statutory regulatory order withdrawing the 25 per cent tax, which was imposed in the budget for the current fiscal year, 2017-2018, on the export of tobacco products such as cigarettes, cigars, cheroots, cigarillos, water pipe tobacco, and homogenized and reconstituted tobacco.

    The exemption will come into force retrospectively from July 1, 2017.

    Officials at the board said they had taken the decision to withdraw the tax in line with the EPZA Act which said exports by the factories located at EPZs would be tax free.

    Bangladesh has eight EPZs.

    Meanwhile, anti-tobacco campaigner A.B.M. Zubair, executive director of Proggra, said the NBR exempted tobacco export tax for EPZ companies at a time when the government had been taking various steps to discourage tobacco cultivation and the consumption of tobacco products.

    But export tax exemption for tobacco products would encourage tobacco cultivation in the country, which would be negative as far as public health and food security were concerned, he said.

    Zubair added that tobacco companies should not be allowed to operate in the EPZs.

  • Smoking costs unaffordable

    Smoking costs unaffordable

    China will be unable to bear the economic and social costs of tobacco smoking if it doesn’t speed up its tobacco-control efforts, according to a story by Sun Wenyu for the People’s Daily Online.

    A recent report issued jointly by 37 organizations, including the Chinese Preventative Medicine Association and the Chinese Association of Tobacco Control, said that China’s tobacco consumption accounted for 44 percent of worldwide consumption.

    China had added 15 million new smokers in five years and the country needed urgently to step up its efforts to control tobacco.

    The results of a nationwide adult tobacco survey that was published in 2015 indicated that 27.7 percent of Chinese people above the age of 15 were smokers. It indicated, too, that the total number of smokers in the country had reached 315 million.

    According to the ‘Healthy China 2030’ blueprint issued by the State Council, China aims to lower the proportion of smokers to 20 percent by 2030.

    The story said that ‘experts’ believed that tobacco consumption had become a global issue that threatened public health and led to serious consequences. Smoking caused major chronic non-infectious diseases, and these diseases accounted for 85 percent of the total deaths in China.

    Though progress had been made, China had a long way to go before it could reach the goals set in the Healthy China 2030 blueprint.

    It would be unaffordable for the country to pay for the economic and social losses if it didn’t speed up the process of tobacco control.

    The story said that experts had called on the country to pass legislation ‘to establish a smoke-free country and comprehensively ban public smoking’.

    ‘In addition, the experts believe that China should reduce tobacco advertisements, increase tobacco tax, and make smoking cessation a basic public health service,’ the story said.

  • Scramble for HNB sticks

    Scramble for HNB sticks

    With the South Korean government expected to raise taxes on the consumable sticks used in heat-not-burn (HNB) tobacco devices, an increasing number of vapers are stocking up on these products, according to a story in The Korea Bizwire.

    Sources within the convenience store industry said yesterday that sales of IQOS HEETS had increased drastically since reports emerged last week that the taxation committee of the National Assembly’s Strategy and Finance Committee had agreed to increase a special consumption tax imposed on HNB products.

    If the tax on HNB products increases as has been predicted, the price of a pack of 20 sticks is expected to rise from around 4,000 won – under the price of a pack of traditional tobacco cigarettes, 4,500 won – to 5,000 won.

    At the convenience-store chain 7-Eleven, sales of HEETS on August 22-27 increased by more than 60 percent on those of the previous week.

    Given a previous week-on-week sales increase of 1.7 percent, and given that other convenience-store chains are also experiencing strongly-increased sales, it seems clear that vapers are bulk purchasing ahead of the proposed tax hike.

    Meanwhile, according to a story by Song Seung-hyun for The Investor, the government is in need of additional tax revenue to fund the welfare pledges it has made.

  • Leaf tax to remain

    Leaf tax to remain

    Chinese lawmakers began yesterday a review of a draft law on leaf-tobacco tax, according to a Xinhua Newswire story.

    The law is due to replace a regulation that has been in place since 2006, but it is not expected to alter the rate of tax levied on leaf.

    The draft law was given a first reading at a five-day bimonthly session of the National People’s Congress Standing Committee, which opened on Monday.

    The law stipulates that a tax rate of 20 percent will be levied on tobacco leaf buyers, the same rate as was levied under the previous regulation.

    China began collecting tax on leaf tobacco sales in 2006.

    Revenue from the tax was said to have increased by an average of 12 percent between 2006 and 2016 and to have totaled 109.7 billion yuan (US$16.6 billion) during that period.

  • No urgency to health plans

    No urgency to health plans

    The proceeds of a health development surcharge on tobacco companies in Bangladesh, Tk 9 billion, has been unused during the past three fiscal years due to a lack of a specific guidelines for spending the revenue, according to a story in The Financial Express.

    In that time, 2014-15, 2015-16 and 2016-17, the government failed to use the money for campaigning against tobacco consumption.

    This was said to be due to the slow pace of approval and implementation of the Health Ministry’s Health Development Surcharge Management Policy.

    A draft of the policy was approved at an inter-ministerial meeting on February 15 and it is scheduled to go before the cabinet this month.

    An official at the Health Ministry was quoted as saying that the surcharge revenue could be used by the ministry’s National Tobacco Control Cell to execute a national tobacco control program that would ‘rehabilitate’ tobacco-users, create alternative jobs for tobacco farmers and ensure overall health development.

    It has taken a long time to get to this point. The government imposed the surcharge in the budget for the financial year 2014-15.

    But it wasn’t until January 2016, and then only at the South Asian Speakers’ conference, that the Prime Minister Sheikh Hasina instructed the authorities to adopt a national tobacco control program with the revenue from the surcharge.

    Following the instruction, the ministry of health framed the draft surcharge policy and sought the opinions of nine relevant ministries including those of finance, agriculture and industries.

    The health ministry published the draft on its website in December 2016 for public opinion.

  • Tax hikes recommended

    Tax hikes recommended

    Steep increases in cigarette excise taxes, instead of incremental ones, would do a better job of reducing poverty and improving health, according to a story in The Jakarta Globe quoting the director of the University of Indonesia’s Center for Health Economics and Policy Studies (Cheps).

    Cigarettes were said to constitute the second largest expenditure after food among the country’s poor, consuming nearly a quarter of their monthly incomes.

    The head of Cheps, Budi Hidayat, was quoted as saying that a threefold increase in current cigarette prices would dissuade many from continuing to smoke and would [thereby] allow greater flexibility in the face of fluctuating food prices.

    Increasing cigarette prices initially led to a rise in poverty, but after a certain point, the poverty rate started to drop, he said.

    A study conducted by the research center found that an increase of more than 112 percent [presumably in cigarette prices] would be sufficient to reduce the poverty level in the country.

    However, if the government imposed a 150 percent tax on tobacco, which would increase the average price of a pack of cigarettes to Rp25,000 (US$1.90), two million people would be lifted out of poverty, the study was said to have found.

    And, of course, there would be a payback for government revenues. A 150 percent excise tax would add Rp200 trillion to the state coffers over five years.

    Budi said that, conversely, the 10.54 percent increase in tobacco excise that the government planned to impose this year would increase the number of people living in poverty by 0.16 percent to 29 million people.