Tobacco products to cost more in Oman after tax hike
The Ministry of Finance (MoF) has given its go-ahead to increase taxes on all tobacco products, according to a senior official from the Ministry of Health.
This is a significant move as Oman was opposed to raising taxes on tobacco products in the past. The sultanate, along with other GCC states, currently levies 100 per cent importation tax, and the addition may be another 100 per cent. A technical committee of the GCC General Secretariat will decide later how much the hike will be.
Although talks on increasing taxes within GCC had been going on for some time, it was in May that a sub-regional inter-country meeting on tobacco control taxes was held in Cairo under the guidance of WHO's Tobacco Free Initiative.
At the meeting, talks were held to introduce the excise system in GCC countries, and pave the way for adopting a new taxation system that could support tobacco control strategies.
Dr. Jawad al Lawati, director of the department of Non-Communicable Diseases Surveillance and Control, Ministry of Health, said that MoF has shown the green light to increase taxes.
“The Minister [Responsible for Financial Affairs] has written to the GCC general secretariat about Oman agreeing to the proposal. It is a preliminary agreement, after which a technical committee of the secretariat will decide on how to frame taxes and how much to increase,” he said.
Although Dr Lawati refused to speculate by how much the taxes would go up, Saudi and UAE Ministry of Health officials were quoted recently as saying that GCC states have agreed in principle to raise them from the current 100 to 200 per cent.
The May meeting also discussed the introduction of an internal excise system as a possible alternative to customs duties on imports, which might be repealed in the near future as a result of international agreements - bilateral and multilateral - including free-trade agreements.
Dr. Lawati added that Oman has long objected to increasing tobacco taxes, which have remained the same since 1999. “The cost of living has risen several folds in the last decade, but the tax on tobacco products has not increased,” he said.
As it is not possible for any GCC state to take a unilateral decision without taking into account prevailing GCC rules and regulations, all members states have to reach a consensus to formally lay down the new taxes, Dr Lawati said.
Tobacco tax facts
A large number of countries (163) levy excise on cigarettes with exceptions in GCC, some Pacific and Caribbean island countries and Afghanistan, Benin, Maldives, and Sao Tome & Principe.
Taxation on tobacco products in the eastern Mediterranean region is one of the most under-utilised tools for tobacco control. Tobacco prices and the incidence of taxation are among the lowest here compared to the rest of the world.
Excise duty is the most important among taxes as it raise prices of tobacco relative to other consumer products, which means additional revenue and reduced consumption.
On an average, a ten per cent increase in price is likely to reduce consumption by eight per cent for middle-income countries and by four per cent for high-income countries, providing substantial revenues to governments.
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