cigarettes tax

Mardi 7 juillet 2009 2 07 /07 /2009 15:58

Cigarette tax increases and tax revenues

Results from studies on demand for cigarettes have shown that the price elasticity of demand for cigarettes is less than one . Thus, cigarette tax increases would lead to an increase in total tax revenues. The issue, however, is complicated by an unintended effect, cigarette smuggling, which results from a cigarette tax increase.
The increase in smuggling which might be stimulated by an increase in taxes can significantly dampen the increase in revenue which would otherwise be expected. The tobacco industry argues that increases in cigarette smuggling and other tax evasions from cigarette tax increases would actually lead to a reduction in tax revenues
Par cigarea - Publié dans : cigarettes tax
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Vendredi 18 juillet 2008 5 18 /07 /2008 10:19

EU wants 8.1 per cent rise in cigarette prices by 2014

Maltese smokers will have to fork out more money to keep puffing in the next few years as the European Commission yesterday laid out new plans aimed at narrowing the difference in price levels of tobacco products in the 27 member states while cutting tobacco consumption.

According to computations made by the EU, the price of a packet of standard cigarettes in Malta will have to increase by 8.1 per cent by 2014 in order to conform to the new rules on minimum taxation of tobacco products. At the same time, Brussels said that the increase in price in Malta should contribute to a reduction of 3.5 per cent in demand. The new proposed directive will need the green light of all the 27 EU member states in order to enter into force.

Smokers in the new EU member states are likely to be the most affected as taxes on cigarettes in these countries are still considered to be very low when compared to the EU average. Malta is however an exception as retail prices are already close to the average price in the EU. Currently, 60.82 per cent of the price of a packet of cigarettes goes to the Exchequer in excise duty and VAT. Still, the EU say this is not enough.

According to the EU, its proposal, part of a four-year review of tobacco duties, would reduce smuggling.

The Commission's primary tool would be to increase the minimum tax that member states impose on cigarettes.

At present, this minimum has two elements: the tax levied as a percentage of a packet's price, which must translate into a minimum price per 1,000 cigarettes. As a percentage, tax would have to rise from 57 per cent to 63 per cent by 2014 or from €64 per 1,000 cigarettes in the most popular price category to €90 for all categories.

Duties on loose-leaf tobacco would also be hiked to bring them more closely into line with those imposed on cigarettes.

A second element in the EU's plan is to tighten definitions of tobacco products because, during the past years, manufacturers have been able to re-classify products in order to quality for lower taxes.

Although through this new directive Maltese smokers would be badly hit, the impact on fellow smokers in some of the other new member states would be dramatic. According to EU calculations, while in countries like Denmark or Finland the price increase will be of about six per cent, in countries like Poland it will rise by 46 per cent.

Statistics show that in the five-year period between 2002 and 2006, excise duties in the EU rose by 33 per cent on average and cigarette consumption dropped 10 per cent.

 

Par cigarea - Publié dans : cigarettes tax
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Vendredi 20 juin 2008 5 20 /06 /2008 15:07

Uganda: Tobacco Firms Should Be Socially Responsible

I wish to draw attention to the damage tobacco growing has caused to the environment in West Nile, the North, Bunyoro and south-western Uganda.

Several acres of woodland have been felled for flue-cured tobacco production in Maracha, Arua, Koboko, Yumbe, Hoima, and Masindi districts. Forests that would otherwise have filtered carbon emissions and protected arable land from erosion are removed, and temperatures in the tobacco-growing districts are rising.

Firms like British American Tobacco, Leaf Tobacco and Commodity, as well as Continental, in their fallacy, give eucalyptus seedlings to farmers supposedly to replace chopped forests without considering the long maturity period and its impact on the water table.

The tobacco firms do not plough back their high profits yet they hype their cosmetic social responsibility programmes. South African Breweries' "Drive Arrive Campaign" resulted into 10% decline in road accident-related deaths in 1998. What have the tobacco companies done?

Apart from the trivial contribution through the mandatory 2000 Crop Ordinance that Arua enacted, tobacco companies have not done much for the community. Since tobacco growing is laborious and an all-year round activity, many food crops are foregone by tobacco farmers, which has caused food insecurity.

Besides, during peak seasons, students stay home harvesting tobacco, leading to poor academic performance and child labour. Tobacco companies have not trained farmers to invest their little earnings and this leaves them in a cyclical poverty trap.

The negative impact of tobacco growing includes the accumulation of chemical compounds in soils and declining fertility. Tobacco production negatively affects people's health. The effects include nicotine poisoning, pesticide exposure, respiratory effects, musculoskeletal and other injuries.

The Government should assist tobacco growers in West Nile to produce alternative crops that thrive well there without fertilisers or pesticides. The sh48b the Government gets in tax revenues from tobacco exports and products should not shroud the negative effects on tobacco on the population.

Par cigarea - Publié dans : cigarettes tax
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