Gov’t hikes tax on Tobacco … DEMTOCO still evaluating impact

Nov 29, 2018 News

The Government continues to target the tobacco industry with stricter measures aimed at curtailing the use of the product.
Minister of Finance Winston Jordan has announced a new regime for taxing tobacco, consisting of a combination of ad valorem and specific taxes.
During the 2019 Budget presentation, Jordan announced the imposition of a specific Excise Tax of $2,500 per 1,000 sticks, together with Customs Duty of 100 percent and VAT of 14 percent.
“In addition to reducing smuggling and simplifying administration, the new regime should result in a net increase in revenue of $50 million,” Jordan indicated.
The industry has come under scrutiny as the Coalition Government has determined that treating tobacco-related illnesses has become too burdensome to the state and taxpayers.
A new Tobacco Control Bill has been enacted to prevent smoking in public places and ban advertising of tobacco products.
New tobacco packaging and labelling regulations have been put in place and the industry has up until February 25, 2019, to comply.
Sixty percent of the package and label of tobacco products must bear graphic pictorial health warnings provided by the Ministry of Public Health.
The Demerara Tobacco Company Limited (DEMTOCO), Managing Director, Christopher Brown said that the company is reviewing the impact the new tax measures will have on the company.
“This announcement would put Guyana’s tax structure in line with countries like Jamaica, next door Suriname and Trinidad. I think in terms of the region, it is aligning with what takes place in the region,” Brown stated.
The DEMTOCO CEO explained that it has been some very difficult months for the industry.
“We would have gone through the Tobacco Control Act, which is one of the most aggressive acts as it relates to regulation in region. We are working with our customers and retailers to transition,” Brown stated.
He pointed out that recently implemented measures by the Guyana Revenue Authority (GRA) that requires tax stamps to be affixed to cigarettes is also costing the company financially, as new machines had to be acquired.
He stated that the company continues to adapt to the changes and does not foresees any staff cuts.
According to the Pan American Health Organisation, 78% of all deaths in Guyana are caused by noncommunicable diseases (NCDs), strongly related to tobacco use.
Over 15% of the adult population currently smokes and more worryingly, the results of a Global Youth Tobacco Survey conducted in 2015 revealed that 14.8% of adolescents aged between 13 and 15 years also use tobacco.
The World Health Organisation awarded Guyana for its efforts to curb tobacco use.
It is believed that tobacco is responsible for seven million deaths per year worldwide. This includes 900,000 persons who die from diseases related to exposure to tobacco smoke. If current trends continue, tobacco use will kill 10 million people per year by 2020. Seventy percent of these fatalities will occur in less-developed and emerging nations.

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