HEALTH IS TAX - Tax on Tobacco

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.

We have seen a decrease in tobacco products in the UAE after the introduction of excise tax. Tax measures are an effective means to reduce demand for tobacco and they help countries reduce consumption to a moderate level. It is not  in completely quitting tobacco consumption, but it certainly has moderate reduction in consumption of these products.

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. 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. Some of these interventions include advertising bans, smoking area restrictions, health awareness campaigns, and tax increases on cigarettes.

TIMELINE OF TAX IMPLEMENTATION

Source: World Health Organisation