Category: Taxation

  • Cigarette Prices up in Kenya

    Cigarette Prices up in Kenya

    Photo: Taco Tuinstra

    Tobacco companies in Kenya have increased cigarette prices even after the government withdrew a proposed excise tax increase, reports The Star.

    Following price hikes of between 20 percent and 33 percent, the price of a single cigarette has increased by an average of KES5 ($0.03) at the retail market. Sportsman, one of the most common brands, now costs KES20 per stick with a packet retailing at an average KES400.

    Originally, the government had planned to increase cigarette taxes to KES4,100 per 1,000 sticks from KES4,067.03 per 1,000 sticks. However, following countrywide protest (which also targeted other tax hikes), President William Ruto declined to sign the legislation into law.

    The tobacco companies who since increased the prices earlier opposed the treasury’s proposals, arguing that the measure would stifle the formal industry and boost illicit trade.

    BAT Kenya attributed the price hikes to rising production costs.

    “Over the past year and into 2024, there has been a significant and sustained rise in our cost of production, occasioned by economic turbulence across both our domestic and export markets, arising from global and domestic geopolitical disruptions, currency fluctuations and rising interest rates, which has adversely impacted our trading environment,” the firm told The Star.

    The price increase, it said, was necessary for the business to navigate an increasingly challenging operating environment and enable the company to continue to meet its business obligations, including supporting the livelihoods of over 80,000 Kenyans in its value chain.

    BAT Kenya’s profits declined 19.2 percent to KES5.57 billion in 2023 due to higher operating cost and lower sales volumes.

  • Critics Bash Vietnam Tax Hike

    Critics Bash Vietnam Tax Hike

    Photo: Taco Tuinstra

    Vietnam’s tobacco tax hike proposal would strain manufacturers and boost black market sales, according to critics.

    The Ministry of Finance wants to levy a new fixed tax on cigarettes on top of the existing excise tax as the government seeks to discourage smoking. While the excise accounts for 75 percent of factory prices, it is only 38.8 percent of retail prices—far below the 70 percent recommended by the World Health Organization, according to the ministry.

    Nguyen Chi Nhan, general secretary of the Viet Nam Tobacco Association, warned that businesses would struggle to adapt to the sharp tax increase.

    Dinh Thị Quynh Van, chairwoman of PricewaterhouseCoopers in Vietnam, pointed out that cheap cigarettes account for 75 percent of the domestic market. A sudden and sharp tax hike, she said, could spur smuggling.

    Van said this happened in countries such as Britain, Germany and Malaysia.

    “It is important for the ministry to have solutions to prevent tobacco smuggling and a clear tax increase roadmap,” Van told Vietnamnet Global.

    Nguyen Thi Cuc, chairwoman of the Vietnam Tax Consultants’ Association, suggested the ministry increase the tax level more gradually to give customers and businesses time to adapt.

    Vietnam is among the top 15 countries in terms of number of smokers.

  • Vietnam Wants to Raise Tobacco Taxes

    Vietnam Wants to Raise Tobacco Taxes

    Photo: Tobacco Reporter archive

    Vietnam’s finance ministry want to raise the excise duty on cigarettes and add an absolute rate per pack, reports Tuoi Tre News.

    The current excise duty on tobacco in Vietnam is 75 percent of the factory price but only 38.8 percent of the retail price, according to the World Health Organization.

    This share is much lower than in Singapore, where tax accounts for 69 percent of the cigarette retail prices, or Thailand, where it is 70 percent.

    To protect public health, the ministry has proposed two solutions. The first involves keeping the 75 percent excise tax unchanged in 2026 but adding an additional tax of VND2,000 ($0.07) per pack.

    From 2027 to 2030, the tax would then be revised up by VND2,000 per pack each year under this proposal until the absolute rate reaches VND10,000 per pack in 2030.

    As an alternative, the ministry has proposed keeping the 75 percent tax unchanged in 2026 but subjecting cigarettes to an absolute rate of VND5,000 per pack.

    This tax will then increase by VND1,000 per pack each year until it reaches VND10,000 per pack in 2030.

    More than 42 percent of adults smoke in Vietnam, which is among the top 15 countries with the highest smoking prevalence.

  • Industry Laments Romania’s Vape Tax

    Industry Laments Romania’s Vape Tax

    Photo: E-Potion

    Tobacco harm reduction advocates are criticizing Romania’s new excise tax on nicotine-free e-liquids and vapes, saying it will discourage smokers from switching to safer alternatives. Vaping companies, meanwhile, fear the increased financial strain will hurt their business.

    “This excise tax increases the cost for consumers who are trying to quit smoking by using nicotine-free alternatives. It also places additional financial burdens on businesses like ours that have invested heavily in the vape market,” said a spokesperson for e-Potion, an e-liquid manufacturer and vape retailer in Sibiu, in a statement.

    “While we understand the need for regulation, it should not come at the cost of public health.”

    E-Potion said will continue to support its customers and help them adapt to the evolving regulatory environment. The company is exploring various initiatives to mitigate the financial burden on consumers who rely on nicotine-free alternatives to quit smoking.

    Additionally, e-Potion is partnering with local health organizations to provide educational resources and support for smoking cessation.

    Romania has been cracking down on smoking alternatives in recent months. Earlier this year, its Chamber of Deputies adopted a bill banning advertising of electronic cigarettes and nicotine pouches.

    In October 2023, the country banned flavored heated tobacco products, in line with the EU requirement.  

  • New Zealand Halves HTP Taxes

    New Zealand Halves HTP Taxes

    Image: enjoynz

    New Zealand has halved taxes on heated-tobacco products (HTPs) to make the products more attractive as cigarette alternatives, reports RNZ.

    A spokesman said Customs Minister Casey Costello, who ordered the tax cut, hopes the move will encourage smokers to switch to less risky nicotine products.

    In a statement to RNZ, Costello said that vaping had been a successful quit-smoking tool and she wanted to see whether HTPs would also be a useful cessation device.

    “Vaping does not work for everyone, and some attempting to quit have tried several times. HTPs have a similar risk profile to vapes, and they are currently legally available, so we are testing what impact halving excise on those products makes.”

    Critics said the government had caved to tobacco lobbying.

    In 2018, Philip Morris International, which sells the market-leading IQOS HTP brand, told the Tax Working Group that the government should “establish a tax rate for heated-tobacco products significantly below the tax rate” for tobacco.

    Earlier this year, New Zealand’s government scrapped the previous administration’s generational tobacco ban, which would have banned sales of tobacco products to anyone born after Jan. 1, 2009, required tobacco companies to lower the nicotine content of their products and reduced the number of tobacco retailers by 90 percent, among other measures.

    The current government appears to be more receptive to tobacco harm reduction measures advocated by the industry and others.

    Costello is reportedly also considering whether allowing the sale of oral nicotine products, such as snus and nicotine pouches, would help New Zealand achieve is smoking reduction objectives.

    Her colleagues at the Ministry of Health have expressed reservations, however, saying there was “weak evidence” that snus helped people quit smoking. “The risk of feeling addicted may be higher for snus than for smoked tobacco. Use of snus may increase the risk of certain cancers.”

    “On balance, we do not recommend extending the range of nicotine products available for sale in New Zealand,” the health ministry was quoted as saying. “Additional products will likely compound existing concerns about young peoples’ addiction to nicotine for little benefit.”

    BAT, which owns the Velo and Lyft brands of nicotine pouches, has lobbied the government for the products to be legalized here.

    “The government’s failure to also include smoke-free oral nicotine products in the same regulatory framework as vaping products presents a significant missed opportunity for advancing Smoke-Free 2025,” it said in a 2021 submission on the government’s smoke-free plans.

  • Maldives to Ditch Import Duty Exemptions

    Maldives to Ditch Import Duty Exemptions

    Image: amazing studio

    The Maldivian government will eliminate import duty exemptions on vape products next month, reports The Edition.

     Deputy Chief Superintendent of Maldives Customs Service Ahmed Niyaz said that the duty exemption previously allowed for tobacco products and vape appliances will be removed starting August 1

    “The Maldives has signed many international treaties on health,” he was quoted as saying. “Allowing exemptions for things such as tobacco is not encouraged by the treaties.”

  • Activists Lament Tax Plans

    Activists Lament Tax Plans

    Photo: mrizwan

    Pakistan’s decision to maintain cigarette tax rates at their current level represents a missed opportunity, according to health activists, reports Business Recorder.

    Speaking at a forum organized by the Society for the Protection of the Rights of the Child, former Federal Minister for Information and Broadcasting Murtaza Solangi said the revenue could have been invested in public health, easing the economic burden on Pakistan’s healthcare system.

    Instead, he said, maintaining current tax rates benefits cigarette manufacturers without additional excise tax contributions, undermining tobacco control efforts and worsening the public health problems caused by tobacco use.

    “The government’s decision to spare the cigarette industry from any tax hike, despite the need to generate additional revenue to address the fiscal deficit, is concerning,” said Muhammad Asif Iqbal, director of the Social Policy and Development Center.

    He said that the government was unlikely to achieve its cigarette tax collection target of PKR324 billion ($1.16 billion) for 2024-2025 at current rates.

    Malik Imran Ahmed, country head of the Campaign for Tobacco Free Kids, said the prevailing rules allowed cigarette manufacturers to increase consumer prices without contributing more to excise tax revenue.

    This situation, he said, not only undermines tobacco control efforts but also risks exacerbating the public health problems caused by tobacco consumption.

     

  • WHO Wants Cambodia to Raise Tobacco Taxes

    WHO Wants Cambodia to Raise Tobacco Taxes

    Image: VDZ3 Media

    Ada Moadsiri, World Health Organization representative in Cambodia, called for an increase in the special tax on cigarettes in the kingdom, reports the Khmer Times. According to Moadsiri, the current tax is not enough to discourage cigarette use or to raise enough revenues to offset the cost in terms of healthcare and economic output caused by tobacco-related illnesses.

    Moadsiri said, at the Youth Forum on Tobacco Tax Measures event, that an effective increase in the special tax would require stakeholders to keep cigarette prices higher and make it more difficult for Cambodians to start smoking.

    “We see that this delusion of the tobacco industry that claims that raising taxes on cigarettes will lead to tax evasion is fake, and I think the tobacco industry uses these fantasies for the sole purpose of preventing or delaying the special tax on cigarettes,” Moadsiri said.

  • Industry Cheers Tax on Acetate Tow

    Industry Cheers Tax on Acetate Tow

    Photo: Tobacco Reporter archive

    Legally operating tobacco companies have welcomed Pakistan’s plan to impose a federal excise duty (FED) on acetate tow, reports The Express Tribune.

    While presenting the federal budget in the National Assembly on June 12, 2024, Finance Minister Muhammad Aurangzeb proposed imposing an FED of PKR44,000 ($158) per kg on acetate tow, a basic raw material used in manufacturing filters.

    Aurangzeb said the recommended FED would burden only the informal sector. Because Pakistan does not produce acetate tow, cigarette manufacturers import the material from other countries.

    During his presentation, the minister lamented the widespread availability of illicit, smuggled and tax-evaded cigarettes in Pakistan.

    The market share of illicit cigarettes has grown to 63 percent at present from around 40 percent a few years ago. While at least 24 cigarette manufacturers operate in Pakistan, less than a handful are registered with the government. The two leading formal tobacco companies alone pay 98 percent of the total tax collected from the cigarette industry. Some politicians are reportedly involved in the manufacture of undocumented cigarettes.

    One official said the government could potentially collect PKR550 billion from cigarette manufacturers if it succeeds in bringing the out-of-tax-net makers into the tax net.

    Earlier governments imposed heavy taxes on cigarettes to discourage people from smoking. However, instead of decreasing cigarettes sales, the strategy mostly diverted smokers to non-tax-paid cigarettes.

    Cigarette manufacturers have been urging the government to crack down on illicit cigarette sales and more forcefully enforce the country’s track-and-trace system. They say that half-hearted implementation has badly hit the formal sector while providing an opportunity for illicit cigarette manufacturers to thrive.

  • UKVIA Warns Against Vape Taxes

    UKVIA Warns Against Vape Taxes

    Photo: VPZ

    The U.K. Vaping Industry Association (UKVIA) has warned that the Conservative Party’s proposal to tax vapes based on nicotine strength, predicted to increase the cost of some products upward of 300 percent, threatens to undo the work that the category has already done in saving millions of smokers’ lives.

    In its submission to the government’s vaping duty consultation, the association argues that by making higher strength vaping more expensive, the proposed tax regime will place an unfair financial burden on nicotine-dependent smokers who are trying to quit. The UKVIA points to the fact that smokers are already significantly overestimating the risks of vaping compared to smoking and that a measure that discourages the use of sufficient nicotine to facilitate a quit attempt is likely to have the effect of decreasing the rate of successful quit attempts.

    The association also argues in its submission that as smokers are disproportionally from lower socioeconomic backgrounds, the effect of introducing an excise duty for nicotine-containing vapes, the most appealing form of e-cigarette for smokers, will be dramatic and potentially fatal.

    This conclusion is supported by HM Revenue and Customs (HMRC) Research Report Number 740, Understanding the Vaping Market, which found that less affluent adults were “more likely than average” to report being current vapers and revealed that 32 percent of current vapers are motivated to use these products over cigarettes due to cost savings. The same HMRC report also highlighted that the doubling of the prices of vaping could result in 62 percent of current users reducing how much they vape.

    The UKVIA is calling for the proposed taxation of vapes to be based on e-liquid quantity and not based on nicotine strength. It believes a specific sales tax on all vaping products and nicotine levels at the rate of £1 ($1.25) per 10 mL would be far more effective in achieving the duty’s stated objectives.

    Smokers who smoke more or are more nicotine reliant need higher concentrations of nicotine, at least initially, according to the UKVIA. The association feels they should not be deterred from quitting by having to pay an extra premium to buy the higher concentration nicotine e-liquids that they need.

    While a tax on vapes may be inevitable, it does need to be effective and not counterproductive.

    John Dunne, director general, UKVIA

    “While a tax on vapes may be inevitable, it does need to be effective and not counterproductive,” said UKVIA Director General John Dunne in a statement. “In recent years, millions of smokers have managed to quit through using vaping products, and discouraging others from making the switch would have disastrous, and in many cases fatal, consequences.

    “The industry therefore urges the government not to unfairly discriminate against nicotine-containing vapes, which are the most popular devices for a reason. It would be far more valuable for the government to instigate a vape licensing scheme, for which we have long been calling; such a scheme would deter rogue retailers, protect our children and help a heavily under-funded Trading Standards to police retailers by raising £50 million a year from the industry.”