Smokers to pay more with tax increase from Sunday

CIGARETTE smokers will pay more when a 10 per cent tax increase takes effect on Sunday.
This follows the Government’s decision to increase the tax for cigarettes in its effort to generate revenue, which it announced yesterday when it handed down the 2020 National Budget.
British American Tobacco head of external affairs George Panao told The National that they did not expect a big increase when they submitted their budget to the Government.
“We know the Government was looking for revenue and we gave our submission for the budget that showed revenue growth, but we did not expect a big increase, one of 10 per cent tax and indexation of 5 percent biannually.
“We will get a 10 per cent increase starting Dec 1, which is this Sunday, and anything we sell after that we have to pay 10 per cent more.”
Panao said by June 1 next year, the company would pay 5 per cent and come Dec 1 it would pay another 5 per cent.
Then there is another 10 per cent in the same month so it will be a total of 20 per cent increase.
“We will have to review our position and see what we will do given this increase,” he said.
“It’s going to be challenging for us to maintain pricing but exercising is a consumption tax so any increases will have to be passed onto consumers.
“(There is) a likelihood of price increase but we will have to be review and reassess the situation.”
Panao said indexation in 2018 and 2019 was 2.5 per cent every six months but this time the tax had increased to 5 per cent so they would have to pass it to the company to decide.
“Definitely it’s the Government’s prerogative to increase taxes but the other thing which we saw that they did not include was funding for illicit trade taskforce.
“In the past, they had funding for the taskforce and when the prices of alcohol and tobacco go up then you open yourselves up for a lot more issues,” Panao said.