Category: Taxation

  • Big tax increase in NZ

    Big tax increase in NZ

    Tobacco excise was increased by 10 percent in New Zealand from the beginning of this year, according to a Radio New Zealand story.

    This year’s increase was the first of four consecutive 10 percent rises that are due to come into force on January 1 each year until 2020.

    The retail price of a pack of cigarettes is currently about $20.

    Roughly 15 percent of adult New Zealanders, or 550,000 people, are estimated to smoke daily, while smoking-related illnesses are said to kill up to 5,000 a year.

    Quitline chief executive Andrew Slater said it was likely more people would stop smoking because of the price rise.

    And Māori Party co-leader Marama Fox said the goal was that by 2025 fewer than five percent of people would be smokers.

    There were many parts of New Zealand that had already reached that goal.

    However, one of the biggest areas that needed to be examined was Māori smoking – Māori women smoking.

    And another was the trial introduction of electronic cigarettes and vaping as forms of cessation.

    Fox said a change to the tobacco laws was being considered, formally to include electronic cigarettes as part of quit-smoking moves.

  • Tax increases have limited effect

    Tax increases have limited effect

    Indonesia’s Finance Ministry has said it doubts whether an increase in tobacco excise can, on its own, reduce the prevalence of smoking in the country, according to a story in The Jakarta Post.

    The ministry believes that tax increases need to be combined with non-fiscal policies to make it more effective.

    Suahasil Nazara, the head of the ministry’s fiscal policy office, said besides gradually increasing excise tax, it was equally important to educate people about the negative impact of smoking and prevent young people from purchasing tobacco products

    “I don’t believe that increasing excise tax will reduce the prevalence of smoking,” he said. “We need to use a combination of fiscal and non-fiscal policies.

    The number of tobacco factories in Indonesia had fallen from 4,669 in 2007 to 714 in 2015, which reflected the recent decline in cigarette production, he added. This fact implied that production had decreased in line with market forces.

    But the government’s argument was slammed by Hasbullah Thabrany, a professor of public health at the University of Indonesia’s School of Public Health, who said the reason behind the declining number of tobacco companies was that many small companies – mostly those producing hand-rolled cigarettes – were unable to compete with big firms.

    The Finance Ministry announced in October that it had issued a regulation to increase excise taxes by an average of 10.54 percent next year for several types of cigarettes.

  • ‘Small Tobacco’ tax in Texas toppled

    The 55-cents-per-pack fee that the state of Texas, USA, imposes on smaller tobacco manufacturers is an unconstitutional tax, an appeals court ruled, according to Courthouse News Service.

    House Bill 3525, which Texas lawmakers approved in 2013, levied fees on tobacco companies that did not participate in the 1997 and 1998 settlements Texas reached in the Master Settlement Agreement with Philip Morris Inc, R.J. Reynolds, Brown & Williamson and Lorillard.

    When the Legislature passed HB 3525 to protect the Big Tobacco settlement funding, the Texas Small Tobacco Coalition and manufacturer Global Tobacco filed suit in Travis County Court.

    They challenged the fee as a tax in violation of the Texas Constitution, which requires taxes to be “equal and uniform.” They also argued the fee violated the equal protection clause and due process clause of the U.S. Constitution.

    In granting the plaintiffs summary judgment and entering a permanent injunction, the trial court found the new law unconstitutional “in its entirety.” A three-judge panel with the 3rd District Court of Appeals unanimously affirmed the ruling Friday.

    Protecting the market share of one company over another “does not justify the unequal treatment of identical products,” Justice David Puryear wrote for the court. “Few would take issue with goals of reducing underage smoking or recovering costs of medical care related to smoking,” the 10-page opinion states. “However, imposing a tax on only one class of identical products is not equal and uniform under Texas law and cannot be upheld.”

    “Only two other [U.S.] states, Minnesota and Mississippi, have assessed a per-cigarette tax on non-settling manufacturers,” Puryear wrote. “The other states established ‘escrow statutes’ that require tobacco manufacturers other than Big Tobacco to either join the master settlement agreement as a subsequent participating manufacturer or remain a non-participating manufacturer. In escrow-statute states, non-participating manufacturers must make annual deposits into escrow accounts, creating ‘a pool of funds from which settling states may secure damage awards from [non-participating manufacturers] for any successful cigarette-related claims.’ After twenty-five years, funds remaining in the escrow accounts, along with any earned interest, are returned to the non-participating manufacturers.”