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July 9th, 2013:

Higher tax halves cigarette imports | Macau Business Daily

Higher tax halves cigarette imports

Stephanie Lai | 09/07/2013 | in Business

A Legislative Assembly member says the tax is still not high enough

Tobacco imports have tumbled since the tax on tobacco was increased in 2011, the Financial Services Bureau has said.

“After the imposition of the adjusted tobacco tax in late 2011, 705 million cigarettes were imported into Macau in 2012,” Financial Services Bureau director Vitória da Conceição said in reply to a written inquiry by Legislative Assembly member Ng Kuok Cheong.

“The figure was almost half the amount imported in 2011, when 1.37 billion cigarettes were imported into Macau,” Ms Conceição said.

“The amount of cigars imported into Macau in 2012 was 18,000 kg, a drastic drop from the 61,000 kg imported in 2011.”

From 1986 to May 2009, the tobacco tax was just 5 avos (0.6 U.S. cent) per cigarette, or about 6 percent of the retail price at the time, Health Bureau data show. The tax was then raised to 20 avos. Since December 2011 it has been 50 avos.

In his inquiry, Mr Ng said the tax rate was still too low.

“Macau’s tobacco tax level is still lagging far behind Hong Kong’s,” he said.

In Hong Kong the tobacco tax is HK$1.70 per cigarette.

“Macau’s tax rate is not even 30 percent of Hong Kong’s,” Mr Ng said.

The World Health Organisation recommends that tax should account for at least two-thirds of the retail price of tobacco products.

In Macau, tax accounts for 40 percent of the retail price.

Ms Conceição did not say when the tobacco tax might be raised.

“Macau Economic Services will keep a close watch on imports and sales of tobacco,” she said.

“They will also continue the dialogue on the tax rate issue with the Health Bureau,” she said.

“We will review when and by how much the tobacco tax should be raised in order to help curb smoking.”

Tobacco wholesalers and retailers told Business Daily in February that the tax increase had made smokers turn to cheaper cigarettes sold on the black market in mainland China.

Macau Customs seized more than 810,000 cigarettes that people were trying to smuggle in through the border crossings last year. They seized 440,000 in 2011.

In May customs seized the largest amount of smuggled tobacco they had found since the handover.

They found over 4,300 kilograms of shredded tobacco worth over 3 million patacas in a container of food aboard a boat.

The government estimated that this was enough to make 4.9 million cigarettes, which could have brought in tax revenue of 2.4 million patacas