Excise duties on tobacco products and alcohol products will increase in Hungary beginning January 2024, according to Finance Minister Mihaly Varga’s tax plan, reports Hungary Today.
Under the plan, the price of a pack of cigarettes could increase by up to 250 forints.
The tax increase is necessary, according to the finance ministry, because the European Union minimum tax is set in euros.
Nicotine substitute solutions, including vaping products, are now subject to an excise duty of ZAR2.90 ($0.15) per mL in South Africa, effective June 1, reports Business Tech.
The forms that govern tobacco product excise have been amended to account for vaping products, according to the South African Revenue Service (SARS).
Manufacturers were required to apply for and obtain licenses from SARS for manufacturing premises before June 1, 2023, and must submit the first excise duty account by July 28, 2023.
“The tax will be detrimental to those using vaping to stop smoking as well as local small businesses—doing more harm than good,” said Kurt Yeo, co-founder of consumer group Vaping Saved My Life (VSML). “At face value, the tax will move the consumer to the intended purpose of vaping less. But with many of those who vape having switched from smoking to this safer alternative and now having to pay far more for the privilege, they might be forced to revert to smoking as a cheaper option.”
“Moreover,” said Yeo, “the excise overlooks that vaping is the most effective method for smoking cessation. So those who smoke and want to make the change will be dissuaded purely based on the price and will have to continue using the deadliest consumer product on the market, cigarettes.”
Many believe that the tax will lead to an increase in illicit products and growth of the black market, according to DFA.
“This tax is (also) going to wipe out a lot of small vaping businesses, and there is already evidence that it is promoting a black market for vaping products,” said Yeo.
Bangladesh Finance Minister Mustafa Kamal proposed a significant increase in import duties on e-cigarettes and their parts in the proposed budget for the 2023–2024 fiscal year, reports the Dhaka Tribune.
The import duty on e-cigarettes will be raised from 5 percent to 25 percent, and for parts of electric cigarettes, the duty will be increased by 100 percent. Previously, there was no import duty on the parts of electric cigarettes.
The minister has also suggested a 150 percent additional duty on liquid nicotine and transdermal nicotine.
The proposed measures aim to increase import duties and make importation of e-cigarettes and related components more expensive in an effort to regulate their use and reduce their prevalence.
The Philippines’ Bureau of Internal Revenue (BIR) has filed 69 complaints for tax evasion worth PHP1.8 billion ($32.25 million) against tobacco traders, reports Business World.
During a nationwide raid in January, authorities confiscated numerous countless cigarette products.
“This is a warning against all illicit traders,” Internal Revenue Commissioner Romeo D. Lumagui Jr. was quoted as saying. “The BIR will not only raid your stores and warehouses, but we will also file criminal cases against you. This will not be the last.”
According to Lumagui, the widespread peddling of illegal tobacco products is hampering government efforts to meet its excise tax collection target of PHP352.9 billion this year.
Lumagui said his agency would partner with online platforms and merchants to impose stricter guidelines on illicit cigarettes.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the state should enforce stricter tax collection measures to reach its collection target this year.
“Through intensified collections based on current tax laws, the government can further structurally increase its recurring tax revenue collections,” he said in a Viber message.
The BIR set a collection target of PHP2.6 trillion this year, 11 percent higher than last year.
The government of Pakistan will collect PKR200 billion ($698.5 million) in tobacco taxes this year, up from PKR148 in the previous fiscal year, reports Dawn, citing a study by The Capital Calling.
In February, the government significantly increased the federal excise duties. According to The Capital Calling study, the higher prices forced one in every 94 smokers in Pakistan to quit.
The tobacco industry says the higher taxes have prompted many smokers to buy their cigarettes on the black market. According to industry representatives, volumes of duty-not-paid cigarettes and smuggled cigarettes have shot up 32.5 percent and 67 percent, respectively, since January. This has bumped the illicit sector’s share to more than 42.5 percent of Pakistan’s total tobacco market.
Critics say the industry is exaggerating the problem, with some surveys estimating the share of illicit sales at only 18 percent of the tobacco market.
Pakistan Tobacco Co. has scaled back production in the wake of the tax hike, citing difficulties competing with the thriving illicit market. In a letter to the Federal Board of Revenue, the company stated its intention to reexport four cigarette making machines due to a decline in sales volume. The company has reportedly already shut down eight of 10 production lines at its Jhelum facility.
Pakistan Tobacco Co. (PTC) is scaling back production as it struggles to compete with illicit tobacco sales, report Pakistan Today and The Express Tribune.
In a letter to the Federal Board of Revenue, the company stated its intention to re-export four cigarette making machines due to a decline in sales volume. The company has reportedly already shut down eight of 10 production lines at its Jhelum facility.
The move comes in the wake of a steep tobacco tax hike. In February, Pakistan increased the federal excise duty by more than 200 percent, driving smokers to cheaper untaxed locally manufactured tobacco products and smuggled cigarettes. In March, production of duty-paid tobacco products plunged 50 percent, according to the Pakistan Bureau of Statistics. The overall large-scale industry, by contrast, suffered only a decline of 25 percent in the production of duty-paid products.
According to PTC representatives, volumes of duty-not-paid cigarettes and smuggled cigarettes have shot up 32.5 percent and 67 percent, respectively since January. This has bumped the illicit sector’s share to more than 42.5 percent of Pakistan’s total tobacco market.
In 2022-2023, the share of legitimate tobacco sector was 41.4 billion sticks while the illicit sector sold 41.6 billion sticks. Observers expect the February tax hike to hand an additional 11.8 billion sticks to the black market in 2023-2024.
PTC Senior Business Development Manager Qasim Tariq said that, as a result of the tax hike, the government would for the first time in Pakistan’s history lose more tax income to the illicit sector than it earned in revenue from legitimate companies.
“If the current fiscal regime prevails, damage to the national exchequer as well as the legitimate industry will be immense and tough decisions will have to be taken,” he cautioned.
A track-and-trace system to help combat illegal tobacco sales has been delayed by legal challenges and other setbacks.
Momentum is building for higher tobacco duties in Nepal , reports MyRublica.
During a discussion with health reporters on May 10, Health and Population Minister Mohan Bahadur Basnet said he is prepared to increase the tax on tobacco products and spend the money on health services.
While developed countries subject tobacco products to tax rates of more than 70 percent, Nepal is currently taxing at a low percentage, according to Basnet.
Basnet aims to invest the money earned from additional tobacco taxation in government hospitals. Nepal’s budget has struggled in the wake of an economic crisis caused by the Ukraine war and Covid-19.
The government of Pakistan should stick with its decision to significantly increase the federal excise duty on cigarettes, according to Sana Ullah Ghumman, general secretary and director operations of Pakistan National Heart Association reports Business Recorder.
Ghumman suggested that multinational tobacco companies may reduce production after the government announced this tax hike in the mini budget presented earlier this year. The proposed tax increase would force the Pakistani smokers to spend around an average of 10 percent of their monthly incomes on cigarettes, according to estimates.
The increase is expected to generate an additional PKR60 billion ($212.57 million) in revenue for Pakistan’s treasury.
Citing a report by Our World in Data showing that smoking causes millions of premature deaths every year, Ghumman argued that higher taxes on tobacco products are the only solution to protect youth from the harmful effects of smoking.
Pakistan’s government expects to collect PKR60 billion ($211.42 million) in additional revenue after increasing the federal excise duty on tobacco products, reports the Pakistan Observer.
The government dismissed concerns about black market sales.
The multinational tobacco industry has incorrectly claimed that illicit cigarettes make up 40 percent of the market, according to the government, which cited independent studies showing that illicit products only account for 18 percent of the market.
According to the Pakistan Observer, the industry is overstating the volume of illegal sales to put pressure on the government following the tax increase.
The implementation of a track-and-trace system has helped decrease illicit products, according to Malik Imran, country head of the Campaign for Tobacco-Free Kids. “Tentatively, we can say the volume is now negligible,” he said.
No new taxes will be imposed on any goods or services in Jordan, including cigarettes and tobacco, according to the Income and Sales Tax Department, reports Jordan News.
The department said rumors of an increase are unfounded.
Previously, Finance Minister Muhammad Al-Ississ confirmed the government’s commitment not to impose any new taxes or increase taxes.
Al-Ississ expects non-tax revenues to grow by 6.6 percent compared to the re-estimation for 2022.