The Ministry of Finance 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 step as Oman was opposed to raising taxes on tobacco products in the past. The sultanate, along with other Gulf States, now charges a 100% importation tax, and the addition can be another 100%. A technical committee of the GCC General Secretariat will decide later how much the hike will be.
While talks about increasing taxes within GCC has been going on for some time, it was in May that the sub-regional intergovernmental meeting on tobacco taxes, held in Cairo under the leadership of the WHO’s Tobacco Free Initiative.
During the meeting, discussions were held to introduce the excise system in the Persian Gulf, as well as pave the way for the adoption of a new tax system that could support tobacco control policies.
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 toincrease taxes.
“The minister wrote to the GCC General Secretariat about Oman agreed to the proposal. This tentative agreement, after which the secretariat of the technical committee will decide on how to formulate and how much taxes will increase,” he said.
Although Dr. Lawati refused to speculate on how much taxes will go up, Saudi Arabia and the UAE Ministry of Health officials have been given recently by saying that the GCC agreed in principle to raise them from the current 100 to 200 percent.
May meeting also discussed the implementation of the system of internal excise tax as possible alternative duties on imports, which may be canceled in the near future as a result of international agreements – bilateral and multilateral – including a free trade agreement.
Dr. Lawati added that Oman has long opposed raising taxes on tobacco products, which have remained unchanged since 1999. “The cost of living has increased several times over the last decade, but the tax on tobacco products has not increased,” he said.
As it is not possible for any Gulf States to take unilateral decisions without taking into account the prevailing GCC regulations, all Member States must reach a consensus to formally establish new taxes, Dr. Lawati said.
Tobacco tax facts
A large number of countries (163) charges excise duty on cigarettes with exceptions in the GCC, some parts of the Pacific and Caribbean Island countries and Afghanistan, Benin, Maldives, Sao Tome and Principe.
Taxation of tobacco products in the Eastern Mediterranean region is one of the most underutilized tools in the fight against tobacco. Tobacco prices and incidence of taxation are among the lowest here compared to the rest of the world.
Excise duty is the most important of taxes as increasing the price of tobacco relative to other consumer goods, which means additional revenue and reduce consumption.
On an average, a 10% increase in price would reduce consumption by 8% of middle-income and 4% for high-income countries by providing significant revenue to governments.