GCC set to impose 100% levy on tobacco imports

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The Gulf Cooperation Council (GCC) have given strong indications of doubling customs tariffs on cigarette and other tobacco imports from next month.

According to a senior Saudi official, finance ministers from six Gulf states scheduled to meet in May to approve the price hike.

Majed Al Monief, Saudi Ministry of Health’s supervisor for anti-smoking drive, said ministers of finance and health from the GCC states have already agreed in principle to raise the levy charged on tobacco imports from 100 to 200%.

“The new duty will be known as the ‘health tax,’ taking into account the huge amount of money each GCC state spends on the treatment of tobacco-related diseases as well as for the rehabilitation of smokers. The finance ministers will decide when the tax will take effect,” Al-Moneif told Asharq Al-Awsat daily on Saturday.

In response to Dubai’s move of increasing duty on all tobacco brands by 100 to 200%, Al Monief urged the need for GCC states to take unanimous decisions with regard to tobacco products.

“The GCC states can take a decision in this respect unanimously. The Gulf states had earlier hiked tobacco customs tariff from 50 to 100 percent, and are now moving toward making a further hike of 100 percent,” he said while adding that additional revenues will go toward anti-smoking campaigns and educating the younger generation about the ills of tobacco consumption.

WTC Moves

Al-Monief explained that the GCC general secretariat has sent a formal letter to the World Trade Organisation (WTO) requesting it to support the GCC initiative to double the customs tariff on tobacco products. Earlier, the WTO had earlier rejected a similar request from the GCC states, insisting that some GCC states had already reached the maximum limit for customs tariffs on tobacco products.

“We are still awaiting a reply from the WTO to go ahead with our plan, in accordance with clause 20 B of the WTO Articles. This provision stipulates that any member country is entitled to take an appropriate decision with regard to any product that is harmful to human beings or animals or the environment,” he said.

He also added that the GCC states will take advantage of this provision while doubling customs tariffs on tobacco products.

According to a statistical report issued by the Customs Department, imports of tobacco products in Saudi Arabia jumped 57% in 2011 compared to 2009 despite imposition of heavy custom tariffs by the government. The Kingdom imported 57,838 tons of tobacco worth SR3.3 billion ($880 million) in 2011 compared to SR2.104 billion ($560 million) in 2009.

According to figures released by the World Health Organisation (WHO), there are 6 million smokers in Saudi Arabia, 1.5 million of whom are women. Some statistics suggest around 22,000 people die in the country each year due to various diseases resulting from the usage of tobacco.

Saudi Arabia is considered the world’s fourth largest importer of tobacco with an average annual consumption per individual put at 2,130 cigarettes.

The WHO said 5 million people die each year in the world from smoking.

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