Retail Price Hike for Cigarettes Much Higher than Government’s 5% Increase in Excise Tax

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It is not unusual for the excise tax on cigarettes to increase on an annual basis and last week Parliament approved amendments to Excise Tax legislation that would see a planned 5% rise each year for the next three years.

However the announcement has seen retail prices for cigarettes hike by between 14% – 50% at various stores with some shops selling loose cigarettes for $2 tala when they used to be $1.

The Ministry of Customs and Revenue, bringing in record tax collections in the past year and a half since the new administration has come on board, will now impose an increase in excise tax on cigarettes by 5% for three consecutive years beginning 01 July 2023 until 30 June 2025.

Retail prices have risen disproportionately 

The amended excise tax has, however, seen an immediate increase in retail prices at local stores with hikes being disproportional to the 5% legislated increase.

Prior to the amendment, the cost of a 20-pack of locally produced cigarettes was $14 tala, however, it is reported that several retail shops and supermarkets are now selling the 20-pack for over $16 tala.

5% of $14 tala = .70

If 5% is to be applied, that is just 70 sene, however, retail stores seem to have settled the new price of a 20-pack at $2 tala.

The cost of the 10-pack of cigarettes was $7.50 before the amendment and 5% of $7.50 = 37.5 sene.

The smaller 10-pack is now seen in retail shops for $9 tala and at some shops they’re going for almost $10 tala.

The excise tax on cigarettes, sweets and foodstuffs with high content of fat helps government to being in revenue that can in turn, be used to support health and prevention programmes caused by the impacts of these products.

During the Parliamentary debate the Minister for Revenue and Deputy Prime Minister Hon Tuala Tevaga Ponifasio acknowledged the concerns raised by Members of Parliament on keeping the balance between impacts on health, consumer choice, and government revenues collected via legitimate local producers of tobacco.

Tobacco taxation is an essential component of the global tobacco control strategy. Most studies found that raising cigarette prices through increased taxes is a highly effective measure for reducing smoking among youth, young adults, and persons of low socioeconomic status.

However, there is a striking lack of evidence about the impact of increasing cigarette prices on smoking behavior in heavy/long-term smokers.

In Parliament last week, MPs spoke about the links to crime. “When youths are desperate to smoke and they cant afford it, they will commit burglary and theft to satisfy their needs.”