Category: Taxation

Healthy use of sin taxes
Zimbabwe’s Health Ministry wants 80 percent of ‘sin’ taxes channelled towards the prevention and control of cancer and other non-communicable diseases, according to a story by Grace Kaerasora for Zimbabwe Situation, quoting The Sunday Mail.
“Sin taxes are suggested as a source for financing health, and this is elaborated in our Health Financing Policy which was launched recently,” the Secretary for Health and Child Care Brigadier-General (retired) Dr. Gerald Gwinji was quoted as saying.
“This just provides government with an option to finance health, but will need to be approved on a tax-by-tax basis.
“As we speak, some taxes are being levied on tobacco, but these go towards general state revenue and are not specifically earmarked for health.
“The rationale behind sin taxes is that they raise funds and also stimulate changes in consumer behaviour, hopefully positive, resulting in reduced exposure to the product and its unwanted effects.”
The ministry’s Zimbabwe Cancer Control Strategy reads, in part: ‘The objective is to mobilise resources for cancer prevention and control. The target is for 80 percent of sin taxes to be channelled to the ministry by 2018. It will advocate enabling legislation, promotion of sin taxes and an environment that promotes tobacco cessation. This will reduce the economic and social acceptability of tobacco use in line with the World Health Organization-recommended strategies.’
The Cancer Association of Zimbabwe’s information, research and evaluation officer, Lovemore Makurirofa, said the Strategy stressed the importance of cancer prevention as a long-term strategy.
“Tobacco does not only cause lung cancer, but also contributes to other forms of cancer such as cervical cancer,” said Makurirofa.
“Tobacco use among youths is now prevalent. In 10 years’ time, there will likely be an increase in cancer cases if these strategies are not implemented to reduce cancer prevalence in the near future.”
August 7, 2017
Tax spending diverted
South Korea’s cigarette-tax revenue is this year forecast to reach three trillion won (US$2.8 billion) for the first time, according to a story in The Korea Herald citing government figures.
Revenue rose significantly from January 2015 when a tax increase helped pushed the price of cigarettes up by 80 percent from 2,500 won per pack to 4,500 won.
According to figures issued by the Ministry of Health and Welfare, revenues from taxes levied on tobacco products increased from 2.4 trillion won in 2015 to 2.9 trillion won in 2016.
And the ministry forecasts that the government could collect 3.06 trillion won this year.
The money the state collects from tobacco-product taxes should, in principle, be used to operate a national health promotion fund that covers the annual health care costs associated with smoking and ‘related diseases’.
However, complaints have been made because the extra tax revenue has been used for other purposes.
Last year, one billion won collected as part of the tobacco tax was allocated to other areas, such as building infrastructure related to telemedicine.
August 3, 2017
Earnings hit in Indonesia
The earnings of Indonesia’s listed cigarette producers are expected to remain under pressure for the remainder of this year, according to a story in Indonesia Investments.
The companies, the story said, would face big challenges this year from fierce competition for market share, from rising taxes and from anti-tobacco regulations.
Of the four publicly-listed cigarette manufacturers in Indonesia, only Gudang Garam had reported growing net sales and profit during the first half of the year. HM Sampoerna and Wismilak Inti Makmur had seen their sales and net profits decline, while Bentoel was yet to release its results.
A finance ministry regulation from January 1 pushed the value-added tax on cigarettes up to 9.1 percent. And later that month cigarette excise tax was increased by an average of 10.54 percent.
August 2, 2017
HNB status unclear
Two months after a smoking ban came into effect in pubs and restaurants in the Czech Republic, smokers are getting acquainted with heat-not-burn (HNB) products that they might be able to use in public places, according to a Radio Prague story.
The Czech authorities have yet to classify heat-not-burn products, which contain but do not burn tobacco, and that deliver nicotine in a vapor rather than in smoke.
“What is important is that the tobacco does not burn –it is merely heated to 300 degrees Celsius which means that there is no smoke and no ash, and you cannot smell it as much as normal cigarettes,” Philip Morris’ Klára Jirovcová Pospíšilová was quoted as saying.
Radio Prague said that HNBs first appeared on the Czech market in 1988, but that they were not a commercial success.
‘At the time, they were no match for the classic cigarette, but with tough anti-smoking laws in force around Europe, tobacco companies are hoping HNBs will see new opportunities opening up,’ Radio Prague reported.
‘Some countries in Europe, such as Poland, Hungary and Spain, have already issued a tough ban on HNBs, putting them on par with regular cigarettes, but others like the Czech Republic have yet to lay down the rules for these products.’
The Czech Health Ministry says the smoking ban should apply to HNBs, but others claim that under Czech law they would fall into the same category as electronic cigarettes, which are not banned in pubs and restaurants.
Meanwhile, it has not been decided at the EU level how to tax HNB tobacco products and the Czech Finance Ministry has yet to address the issue.
For the time being, HNBs are exempted from consumer tax in the Czech Republic, which gives them an enormous advantage over traditional cigarettes.
An amendment to Czech law is expected to clarify the status of HNBs by 2019.
August 1, 2017
Illegal trade targeted
The trade association representing the UK tobacco industry yesterday launched a campaign targeting the illegal tobacco trade across some of the busiest transport hubs in the UK, key transports routes in and out of the country and online.
‘The campaign which builds on previous TMA [UK] activities seeks to challenge the flows of non-UK duty paid tobacco from known high-risk routes into the UK which is then sold on illegally in a variety of ways,’ said a TMA press note.
‘Research shows that this ranges from simply selling on to friends and family or by more sophisticated means such as through the use of retailers, social media and community websites.
‘The TMA is therefore extending its campaign activities to focus on such online platforms used for the sale of illegal tobacco as well as known transport routes used to bring non-UK duty paid tobacco into the UK.’
The campaign, which will run during the summer, will target, for instance, airports, ports, international coaches, websites and social media platforms.
The TMA said it was advising adult consumers to adhere to the government guidelines and only bring tobacco into the UK for personal use, because the consequences for doing otherwise could be severe.
And it said it was advising smokers not to buy illicit tobacco products from online sources because in doing so they could be aiding organised crime.
“As people travel to and from the continent over the summer holidays, we are taking this opportunity to remind them with this new campaign that it is illegal to bring back tobacco from overseas and then sell it on in the UK,” said Giles Roca, director general of the TMA.
“Reselling tobacco bought overseas is not a victimless crime. This practice affects many hard-working independent shopkeepers who are deprived of legitimate tobacco sales and related footfall.”
August 1, 2017
Prices linked to poverty
A recent study has found a correlation between US state and local jurisdictions that increase cigarette excise taxes and the number of households in those jurisdictions that apply for food stamps for the first time, according to a National Public Radio (NPR) story relayed by the TMA.
The study found that on average, a 56 percent increase in cigarette taxes resulted in seven percent of eligible unenrolled households joining the program.
The study was discussed on the July 25 episode of NPR’s Morning Edition: http://www.npr.org/2017/07/25/539183590/hidden-brain-cigarette-taxes.
July 28, 2017
Taxing smokers
ASEAN governments should try to make their tobacco tax policies more effective, not only for the health of smokers but also for the health of their revenues, according to a story in Vietnam News.
This recommendation was issued recently in a report by the Southeast Asia Tobacco Control Alliance (SEATCA).
SEATCA based its recommendation on a tobacco tax index that was made public during a regional workshop on strengthening tobacco tax administration.
The workshop was held in Siem Reap, Cambodia, and attended by tobacco tax experts from ASEAN countries, including Cambodia, Indonesia, Laos, Myanmar and Vietnam.
The index tracked the ‘progress’ of tobacco tax policies against Article 6 of the World Health Organization’s Framework Convention on Tobacco Control.
It showed that while some countries had made what was called significant progress in formulating and implementing tobacco tax policies, the region had advanced at a slow pace in the past few years, and had been outpaced by economic and income growth.
According to the index, cigarettes are becoming more affordable in ASEAN countries.
Thailand imposes the highest tax burden as a percentage of retail price, 70 percent, Singapore imposes 66.2 percent, Brunei 62 percent, Cambodia 25-31.1 percent, and Laos 16-19.7 percent.
Sophapan Ratanachena, SEATCA’s tobacco tax program manager, said most ASEAN countries had no long-term tobacco tax policies with regularly adjusted fiscal and public health targets.
“The major obstacles in some countries are the ineffective tobacco tax structures, such as Indonesia’s multi-tiered system or those with purely ad valorem tax systems, weak tax administration and tobacco industry interference to weaken tax policy or reduce tax collection efforts,” Ratanachena said.
Based on international guidelines, SEATCA urged ASEAN governments to implement long-term tobacco tax policies that included public health targets, to apply a uniform specific tax system or a mixed system with a minimum specific tax floor, and to tax all tobacco products in a comparable way.
SEATCA recommended that governments should ask tobacco companies to submit periodically detailed financial reports, to establish a tracking and tracing system, including fiscal markings with a unique identifier, to reduce the risk and assist in the investigation of the illegal trade in tobacco products; and to forgo tax-free or duty-free tobacco sales.
It recommended that governments should implement a code of conduct for all government ministries and officials that prohibits unnecessary interaction with the industry.
July 26, 2017
Forum on securing taxes
Next year’s Tax Stamp Forum has been scheduled for May 7-9 in Nairobi, Kenya.
According to a press note issued by the organizers, the forum will bring together experts from across the excise-revenue sector, including suppliers, integrators and representatives of government excise departments.
Participants will ‘hear about and discuss the latest developments in tax stamp systems and learn from one another about requirements, best practice and potential solutions,’ the note said.
The event, which was first held in 2009, attracted 250 delegates when it was staged in Berlin, Germany, last year.
The deadline for the submission of papers is October 27 and there are two early-booking deadlines, November 10 and February 9.
Registration is available at: https://www.cvent.com/events/tax-stamp-forum-2018/registration-d34db975454541a09743ac4e2cbbfbf9.aspx?fqp=true.
July 26, 2017
Cigarettes top list of fakes
Cigarettes topped the list of counterfeit products seized at the EU’s external borders last year, according to a Commission press note.
New figures published by the Commission show that customs authorities detained more than 41 million ‘fake and counterfeit’ products at the EU’s external borders in 2016.
‘The goods had a total value of over €670 million,’ the press note said.
‘Everyday products which are potentially dangerous to health and safety – such as food and drink, medicines, toys and household electrical goods – accounted for over a third of all intercepted goods.’
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, was quoted as saying that a high level of protection of intellectual property was crucial to support growth and create jobs.
“Fake goods pose a real threat to health and safety of EU consumers and also undermine legal businesses and state revenues.
“Studies show that the EU is particularly exposed to imports of counterfeit products.”
Moscovici paid tribute to the work done by customs authorities in combating fake goods.
“They need support and resources to enable them to protect us all from the dangers that they can pose,” he said.
“Co-operation between law enforcement authorities should be strengthened and risk management systems upgraded to protect the EU from goods infringing on intellectual property rights.”
At 24 percent, cigarettes comprised the top category of counterfeit products seized. Toys (17 percent) were second, foodstuffs (13 percent) were third, and packaging material (12 percent) was fourth.
The number of seized products was up by two percent on that of 2015.
Eighty percent of the counterfeit goods that arrived in the EU came from China, but large numbers of cigarettes originated in Vietnam and Pakistan.
The Commission’s report on customs actions to enforce international property rights has been issued annually since 2000 and is based on data transmitted by member states’ customs administrations to the Commission.
The full report is at: https://ec.europa.eu/taxation_customs/sites/taxation/files/report_on_eu_customs_enforcement_of_ipr_at_the_border_2017.pdf.
July 24, 2017
Hard times for smokers
Already an ‘endangered species’ in the public realm, life will get even more difficult for smokers if Israel’s Health Minister Rabbi Yaakov Litzman has his way, according to a story by Dror Halavy for Hamodia.
Litzman is said to be seeking to impose more restrictions on smokers, including banning tobacco smoking from places where it is currently permitted, increasing taxes on cigarettes and other tobacco products, and imposing bigger fines on people who smoke where smoking is banned.
Smoking in public was banned nearly a decade ago, with smokers restricted to specific areas of restaurants, bus stations, places of entertainment, banks, malls and offices.
Under current rules, the proprietors of establishments that choose to allocate spaces for smokers must ensure that no second-hand smoke escapes to bother non-smokers.
Setting up such spaces is not mandatory, and many businesses and offices ban smoking on their premises altogether.
The new regulations proposed by Litzman would ban such smoking areas, and that ban would apply also to open-air venues, such as stadiums.
Smoking outdoors would be banned within 10 meters from the entrance to a building.
Under Litzman’s proposals, more inspectors would be hired to ensure that no smoking takes place in hospitals, or government and public institutions, and fines for violating smoking bans would be increased.
In addition, tobacco companies that advertise their products in newspapers or online (advertising in broadcast media was banned more than a decade ago) would be required to place public notices of the same size pointing out the dangers of smoking.
Also banned would be toys or food that resemble tobacco products (such as candy cigarettes or cigars), and companies would be banned from distributing free cigarettes.
Halavy’s story is at: http://hamodia.com/2017/07/23/new-rules-make-life-even-harder-smokers/.
July 24, 2017