GCC plans tobacco tax from April

By Vinod Nair — MUSCAT: Jan. 7: The Gulf Cooperation Council (GCC) countries plan to slap luxury tax on 93 products, including tobacco and energy drinks, from the second quarter of this year. Oman budget for 2017 too mentions about introducing selective tax, concurrently with GCC countries, on commodities such as tobacco, alcohol and others. The move comes on the realisation that tobacco is “one of the biggest public health threats” the world has ever faced, killing six million people a year. More than five million of those deaths are a result of direct tobacco use, while more than 600,000 are a result of non-smokers being exposed to passive smoking.
According to the World Health Organization (WHO), tobacco use is one of the main risk factors for a number of chronic diseases, including cancer, lung and cardiovascular diseases.
In Oman, daily smoking among Omanis is 14.3 among males and 0.3 among females, according to 2014 WHO report. It is in this context that the GCC countries plan to impose luxury tax on 93 products, including tobacco, automobiles and luxury goods.
Oman has mentioned about the tax on tobacco in its latest budget.
According to Fabio Scacciavillani, chief economist at Oman Investment Fund, “It is a trend that puts the GCC closer to other developed nations. It is difficult to estimate how much, but certainly a higher price will reduce consumption.”
A health expert from a private hospital said: “It is generally the individual determination and strong health advice from doctors that do the trick. But a financial burden may add to the resolutions.”
Taxes on commodities like tobacco and alcohol are likely to be 100 per cent and soft drinks 50 per cent.
According to a report by Saudi Press Agency quoting the Ministry of Finance in Riyadh, selective tax will be “in accordance with the resolutions of the Supreme Council for leaders of GCC in the 36th session held in December 2015 and 37th session held in December 2016.
Taxes were originally proposed by the GCC in December 2015, but approved only at the end of last year.”
Saudi Arabia’s Ministry of Finance has not yet implemented the tax on soft drinks, energy drinks and tobacco. The ministry said it had not yet applied the tax and will not do so until the procedures have been ratified. The earliest date for the implementation is expected to be April 2017.
GCC finance ministers are expected to meet, calling for the need to rehabilitate the people of the Gulf.
Qatar has already announced plans to levy excise duty on tobacco and sugary drinks from this year in line with a GCC agreement, which is expected to yield additional revenue as per the International Monetary Fund (IMF).
Other Gulf states have not officially announced when they will introduce the taxes.