Tax evasion, Egyptian style: ‘single’ cigarette sales spike
low-income buyers have turned to purchasing singles, to save money for other necessities.
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The Cairo and Giza Tobacco Traders Association expects a decrease in tax proceeds of EGP 2bn ($262 million) in the current fiscal year’s national budget, due to a nationwide increase in purchasing single cigarettes.
The Association heard several complaints from cigarettes traders stating that buying cigarettes in singles, rather than purchasing a whole pack, has increased to 15%-20% of cigarettes sales. This has occurred particularly after the increase cigarette prices, compared to 1% before the prices increase, according to a press release Saturday.
The association added that traders used to sell 45 or 40 cigarette packs per day, but now their sales have reached 20 cigarette packs. This is because low-income buyers have turned to purchasing singles, to save money for other necessities.
The association said that this negatively affects the national budget due to a decrease in taxes revenues, adding that some traders complain of a lack of cigarettes. This, in turn, opens the door for smuggling and fake brands to enter the market.
The Ministry of Finance depends partially on cigarettes tax revenues, which are used to spend on education and health sectors. However, the decrease in sales will affect the budget, especially after the decrease of the Egyptian stock exchange’s tax revenues, according to the Association.
“The Association demanded that President Abdel Fattah Al-Sisi holds Minister of Finance Hany Kadry Dimian accountable for his failed financial policies, which led to tax evasion, strengthen the presence of terrorism and harming public interest,” the statement read.
In early April, the association submitted a proposal to legalise the hashish trade to the Legislative Reform Committee headed by Prime Minister Ibrahim Mehleb. The association said that legalising such a trade could contribute quickly and effectively in decreasing the national budget deficit within a few years, compared to other economic methods.
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