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December 16th, 2011:

Rules on duty-free tobacco needed

16/12/2011 10:42:00

The Legislative Assembly (AL) unanimously passed the new tobacco tax yesterday but several lawmakers urged the government to introduce stricter rules for duty-free cigarettes, similar to those enforced in Hong Kong.

Others said the MOP 6 tax increase is not enough and that Macau still lags behind other regions, while some lawmakers expressed concerns about the risk of tobacco smuggling.
The tobacco tax will increase by MOP 0.5 for each cigarette, in order to be in line with the ban on smoking in public places that comes into effect from January 1. Tobacco packs will increase by at least MOP 6.
In Macau the tobacco tax was last updated in 2009 and is currently at MOP 0.2 per cigarette or MOP 4 per 20-cigarette pack. As soon as the revision comes into effect, the tax will be MOP 10 per pack.
Currently, the average price of a cigarette pack is MOP 20 while in Hong Kong the price is MOP 50 after a 41.6 tax increase enforced in June this year.
The new tax was submitted to the AL in an urgent procedure and all lawmakers expressed their support of the government’s proposal. However they want more to be done in order to control smoking in Macau.

Smuggling fears

Directly-elected lawmaker Ng Kuok Cheong warned the government that the “tobacco smuggling market doesn’t seem to be under control” and sellers are worried that it will affect their business. “Does the government have the capacity to fight smuggling?” the pan-democrat questioned.
He also stressed that not only are tobacco prices higher in Hong Kong but that it’s also forbidden to enter the neighbouring SAR with more than 19 cigarettes. In Macau people can enter with as many as 10 packs.
The goal set out by the World Health Organisation is that tobacco tax should be 70 percent or more of the retail cost of a packet of cigarettes. According to the bill approved yesterday, the local tobacco tax duty will only be 38 percent of the retail cost while in Hong Kong it is close to 70 percent.
Ho Ion Sang said that Macau is still far away from that goal. “The government needs to consult the governments of neighbouring regions because there is a large discrepancy in this area. What will the government do to control smuggling? Will the government limit the number of duty-free tobacco?” he asked.
Pan-democrat Paul Chan Wai Chi also warned that “smuggled or counterfeit tobacco affects residents”. He urged more work be undertaken by the Customs Service (SA).

Rule revision

Other AL members questioned whether the SA has the necessary human resources to increase control and inspections.
Most lawmakers urged the government to continue to raise the tax in order to reduce the number of smokers, mainly among the youth.
Chui Sai Cheong added that the anti-smoking act, to be enacted next month, should be revised after the three-year grace period for casinos and bars.
Ho Sio Kam, from the education sector, said that the tax is “not the only way” to prevent smoking. “Awareness and education are also important. Each person can carry 10 packs of duty-free tobacco to Macau. Can you limit that? Otherwise the tax cannot produce the desired effects,” she added.
Secretary for Economy and Finance Francis Tam Pak Yuen pledged to strengthen the awareness and punishment of smuggling, as well as to enhance the action of the SA.
“We will promote close contact and communication with mainland China and tackle the smuggling routes,” he pledged.
As for the change of duty-free rules, Tam agreed with lawmakers’ opinions but explained that it requires the revision of the law on foreign trade. He also promised to review the tax-duty in the future.
Yesterday lawmakers also passed the 2012 Government Budget.