Taxes hurt: No choice! but to kick the smoking habit in UAE
'Tax measures are an effective means to reduce demand for tobacco'
Taxes play a key role in reducing the consumption of cigarettes and other tobacco-related products among the cost-conscious consumers, according to tax experts, doctors and smokers.
Taxes might not create a hole in the pockets of well-to-do smokers but cost-conscious and lower middle income people certainly cut down on smoking post-taxes period, they said.
"Tax measures are an effective means to reduce demand for tobacco and they help countries reduce consumption to a moderate level. A 10 per cent raise in tax can lead to a reduction of three per cent tobacco consumption," said Anurag Chaturvedi, managing partner at Chartered House.
"We have seen a decrease in tobacco products in the UAE after the introduction of excise tax. Various studies cited that taxes may not result in completely quitting tobacco consumption, but it certainly has moderate reduction in consumption of these products," he added.
The UAE imposed 100 per cent excise tax on tobacco and tobacco products in October 1, 2017. From December 1, 2019, the Federal Tax Authority levied 100 per cent excise tax on all electronic smoking devices and equipment, as well as liquids used in e-cigarettes.
All tobacco products and equipment are also subject to five per cent value-added tax (VAT), in addition to excise, since January 1, 2018. After the introduction of excise and VAT, the UAE account for 73.54 per cent combined tax rate on the price of the most sold pack of cigarette brands.
Taxes around the world
Globally, 185 countries levy taxes on tobacco and tobacco products, according to a 2019 WHO report on the global tobacco epidemic.
Data showed that 10 countries with the highest taxes on tobacco products include Finland, Bosnia and Herzegovina, Bulgaria, Mauritius, Brazil, France, Chile, New Zealand, Turkey and Montenegro.
Andre Daoud, CEO of Medcare Hospitals and Medical Centres, said many countries have intervened to decrease the prevalence of cigarette smoking and, most recently, the advent of vapes and e-cigarettes.
"Some of these interventions include advertising bans, smoking area restrictions, health awareness campaigns, and tax increases on cigarettes. Tobacco taxation has been recognised to be one of the very effective ways for decreasing smoking. The primary influence of cigarette taxes is to reduce the level of cigarette purchase and as a consequence of cigarette smoking," said Daoud.
He noted that youth below the age of 19 ought to be a critical focus for tobacco control policy. "Because most adult smokers start smoking at this early age, tax increases will help them reach adulthood without smoking, then the probability of smoking onset is greatly reduced," he added.
Muhammad Saad Khan, who celebrated his 28th birthday this week, is a casual smoker but now he is seriously considering quitting smoking completely following the price hike.
"People with deep pockets continue to smoke but budget-conscious smokers have certainly cut down or quit smoking altogether," he said.
"Even youngsters have cut down purchases of tobacco as they rely on their parents for pocket money. But older and financially capable smokers continue to smoke as it is affordable for them," Khan said.
Sharjah-resident Salman Shakil Sheikh also confirms that he now smokes less cigarette due to imposition of excise taxes on tobacco.
"Now, I have reduced smoking and also switched my brand which costs half of my previous brand. I smoke 80 per cent less than before because it has become costlier. Some people may not totally quit, but they certainly reduce smoking, especially cost-conscious people," he said.
Father of two daughters, Sheikh is a taekwondo specialist and runs training institutes in the UAE.
"I am seriously thinking of quitting smoking. As we all know, smokers cannot quit abruptly. It is a slow process because if people quit smoking abruptly, it affects them psychologically as they'll lose temperament quickly," he said.
TIMELINE OF TAX IMPLEMENTATION
- October 1, 2017: The UAE imposed 100 per cent excise tax on tobacco and tobacco products
-January 1, 2018: All tobacco products and equipment are also subject to five per cent value-added tax (VAT), in addition to excise
- December 1, 2019: The Federal Tax Authority levied 100 per cent excise tax on all electronic smoking devices and equipment, as well as liquids used in e-cigarettes
AROUND THE WORLD: 10 countries with highest tobacco taxes
Bosnia and Herzegovina: 83.80%
New Zealand: 82.21%
*Total tax includes cigarette specific excises, ad valorem excises (percentage of the total cost), value added taxes, custom duties and other taxes.
Source: World Health Organisation
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