KINGSTON: The announcement in Parliament by Finance Minister, Dr Peter Phillips of an increase of 14.28 per cent in the Special Consumption tax on cigarettes, The Government will only serve to fuel the already popular and soaring illicit trade in cigarettes.
The announcement of a 14.28% increase in the Special Consumption Tax on cigarettes by the Minister of Finance. The Company wishes to highlight that this increase in excise comes off the heels of the introduction of stringent tobacco control measures which had a significantly negative impact on the business.
While the company remains particularly concerned – as experience has shown that these sort of excise shocks serve primarily to provide even greater fuel to the illicit trade, which continues to be an enterprise that robs the Government of well-needed revenue from taxes authorized by law, we appreciate the plans that the Government and the Jamaica Customs Department have towards fighting the illicit trade.
The truth is, estimated Government revenues lost from the illicit trade in cigarettes currently stands at over $1.6 billion, and we expect that this amount may increase with this latest increase in excise. We therefore urge the authorities to implement a robust and comprehensive transnational effort to combat the illicit trade in cigarettes.
Carreras is of the view that we are at a critical point where these types of shocks, whether excessive excise increases or draconian and impractical tobacco regulations, will have a deleterious effect on our business, and this no doubt implies diminishing revenues for the government as well as give greater sustenance to the illicit trade in tobacco products. To be clear, the authorities must note that there is a direct link between the rise of the illicit cigarette trade from poorly thought out, and implemented tobacco regulations and excessive excise increases. The sad reality is that the illegal trade cannot be regulated, and the Government gets no revenues from that trade.
Therefore, as legitimate distributors of tobacco products in Jamaica, and as major contributors to Government revenues, contributing just about 4% of the Government’s revenue annually, we will continue to emphasize the necessity for continued partnership and consultation with the Government on issues affecting our industry, including excise increases as well as tobacco control regulations.
We will therefore continue to reject any attempt to stifle and remove our legitimate right to protect and defend our ability to engage in meaningful and fulsome discussions and engagement on any piece of legislation and or public policy that will impact the Company. This is certainly no different from what obtains in other industries. We believe that as a responsible company we can contribute – through information, ideas and practical steps – to helping regulators address the key issues surrounding our products and our industry.
