In less than two months, smokers indulging in Cambodia’s inexpensive cigarettes will have to reach a little deeper into their wallets.
Starting in July, the tax on cigarettes will jump from 20 per cent to 30 per cent of the retail price, with a tax base rise from 65 per cent to 85 per cent.
But one advocacy group said the increase would not be enough of a disincentive to encourage smokers to quit or to stop others taking up the habit.
The announcement was made on Friday during ASEAN’s Workshop on Tobacco and Illicit Trade in Manila.
“The department decided to increase the tax to promote residents’ health,” Heng Sothy, deputy chief of the Audit Bureau in the General Department of Taxation, said.
Just last week, the Southeast Asia Tobacco Control Alliance called Cambodian cigarettes “dangerously cheap”. A report last year found that Cambodia had the second-lowest taxation rate in ASEAN after Laos.
At $0.58 a pack, popular local cigarette brands in Cambodia and the Philippines have some of the lowest prices in the world. That price could go up to about $0.64, if factoring in the 10 per cent tax hike.
“We are pleased to hear that the government decided to increase tobacco tax,” Mom Kong, executive director of NGO Cambodian Movement for Health, said. “Increasing taxes will mean higher prices and consumption will decline.”
A 2011 World Health Organization report found that nearly 10,000 people die each year from tobacco-related diseases in Cambodia. But according to Dr Ulysses Dorotheo, project director at the Southeast Asia Tobacco Control Alliance, to fully reap public health benefit, taxation must be high enough to hamper affordability. He noted that, at just 30 per cent, the new rate will not mean too devastating a price hike.
An industry group had a different view.
“Any tax increase will have an impact. The price of the product as a whole will go up, and if the price increases, then sales will probably go down, and the revenues for tobacco companies will decrease,” said Um Rottana of British American Tobacco in Cambodia.
ADDITIONAL REPORTING BY LAIGNEE BARRON