The Ministry of Finance has denied reports by some media outlets regarding withdrawing or abolishing the presidential decree on increasing cigarette taxation.
Cabinet spokesperson Hossam El-Kaweesh denied the reports, saying in a phone call with Daily News Egypt that “taxes on cigarettes were not abolished”. The tax is estimated to provide between EGP 5bn and EGP 5.5bn annually, most of which will be directed to improving healthcare services.
Official in British American Tobacco Egypt announced on Wednesday that its product prices in Egypt will be: EGP 23 for Dunhill; EGP 23 for Kent; EGP 15 for Rothmans; EGP 7.5 for Rothmans s10; and EGP 13 for Viceroy. The price announcement by the company is consistent with the company’s strategy based on transparency and working on controlling any attempts of pricing manipulation.
The decision is also in line with Egypt’s commitment to the WHO Framework Convention on Tobacco Control, stipulating that the government must apply prices and taxation policies to limit smoking harms, El-Kaweesh added.
The Ministry of Finance withdrew its previously issued Decision 120/2015. The decision had declared the allocation of a specific amount of cigarette taxes to the Health Insurance Authority (HIA) and determined the way to collect them, according to the Official Gazette on Wednesday.
The ministry stressed in a statement issued late Tuesday on the continual application of the new increase due to the presidential decree. It will raise domestic cigarettes prices at about 50 piasters per pack only, EGP 1 for non-luxury foreign packs and EGP 1.5 for luxurious packs.
Government revenues from the cigarette tax reached EGP 12.4bn during the last six months of 2014, double the tax on the profits of Suez Canal, according to the latest Ministry of Finance data.
According to the statement, Minister of Finance Hany Kadry Dimian said there is in an effort to ensure regularity of financial flows to various healthcare programmes to protect Egyptians benefiting from these programmes. This is especially in health insurance programme, and Dimian has issued an internal decision to cancel decision number 2015/120.
This would have allowed a change of mechanism of various healthcare programmes receiving financial allocations, so that it would not be linked to the outcome of cigarette tax. These programmes, however, receive their allocations directly from the state budget, and according to specified timings.
The ministry published in the Monday issue of the official gazette a decision for the Egyptian Tax Authority (sales tax), when collecting sales tax on cigarettes, to collect an amount of 50 piasters. This would be for every 20 cigarettes produced locally and sold in the local market, and would be used for the benefit of the health insurance fee. The Customs Department, when collecting customs duties on imported cigarettes, handles the collection of the amount mentioned for every 20 cigarettes for the benefit of the health insurance fee.
The statement noted this amendment in the manner of distributing financial allocations aims to ensure the sustainability of spending on healthcare programmes and not allowing them to be affected by any fluctuation or drop in tax revenues on cigarettes.