Tobacco Revenue
- RUDRA PANGENI
Illegal cigarette imports also blamed
KATHMANDU, April 7: Pictorial warnings on tobacco products have resulted in a decline in the consumption of tobacco and shrinking excise revenue.
Excise duty collection figures for tobacco products posted a negative growth of 5.5 percent in the first eight months of the current fiscal year. Tax officials assume that the pictorial warnings on tobacco products that started appearing from last May have had an impact on the consumption of tobacco in the form of cigarettes or as chewing tobacco.
KATHMANDU, April 7: Pictorial warnings on tobacco products have resulted in a decline in the consumption of tobacco and shrinking excise revenue.
Excise duty collection figures for tobacco products posted a negative growth of 5.5 percent in the first eight months of the current fiscal year. Tax officials assume that the pictorial warnings on tobacco products that started appearing from last May have had an impact on the consumption of tobacco in the form of cigarettes or as chewing tobacco.
Cigarette manufacturers acknowledge that tobacco consumption has declined in recent months, compelling them to cut back production. But they also blame illegally imported cigarettes, which are rife in the market. Consumers developed a sort of hesitation to smoke or chew tobacco, leading to a slowdown in the production and import of tobacco products. Producers likewise blame price increases for tobacco poducts and the effect of this on consumers.
Data compiled by the Inland Revenue Department (IRD) shows that the excise revenue posted a negative growth of 5.5 percent to Rs 4.57 billion over the first eight months (mid-July 2014 to mid-March 2015) of the current fiscal year. This bucks the trend of continuous growth in recent years. The excise duty collected on tobacco products was Rs 4.83 billion over the same period last fiscal year.
Talking to Republica, IRD spokesperson Chandra Kala Paudel said that there was continuous growth in excise duty collection from tobacco products in past years but this year's first eight-month data shows that there was a negative growth. "We estimate that the decline in production and import of tobacco products is behind the downward trend in revenue collection," added Paudel. By contrast, the excise revenue collections on liquor and beers show 7 and 26 percent growth respectively over the same period.
Officials at the Ministry of Finance blame the decline in excise revenue for the country missing its revenue target by about 2 percent during the eight months, against a past record of at least achieving the targets regularly.
According to tobacco products manufacturers, the tobacco production is worth over Rs 3 billion annually.
The government implemented mandatory pictorial warnings on cigarette packets about the hazards of tobacco consumption, for 75 percent of the products from May, and this coverage is to be extended to 90 percent from May 15, 2015.
Meanwhile, Health Secretary Shant Bahadur Shrestha has described the reported decline in excise duty from tobacco products as an achievement. "Revenue is not the important thing against the health of citizens is the principle behind discouraging tobacco consumption with mandatory pictorial warnings of hazard to health," added Shreshtha.
According to figures from the Ministry of Finance, cigarette production in the country was 11,130 million sticks in 2008-2009.
Data compiled by the Inland Revenue Department (IRD) shows that the excise revenue posted a negative growth of 5.5 percent to Rs 4.57 billion over the first eight months (mid-July 2014 to mid-March 2015) of the current fiscal year. This bucks the trend of continuous growth in recent years. The excise duty collected on tobacco products was Rs 4.83 billion over the same period last fiscal year.
Talking to Republica, IRD spokesperson Chandra Kala Paudel said that there was continuous growth in excise duty collection from tobacco products in past years but this year's first eight-month data shows that there was a negative growth. "We estimate that the decline in production and import of tobacco products is behind the downward trend in revenue collection," added Paudel. By contrast, the excise revenue collections on liquor and beers show 7 and 26 percent growth respectively over the same period.
Officials at the Ministry of Finance blame the decline in excise revenue for the country missing its revenue target by about 2 percent during the eight months, against a past record of at least achieving the targets regularly.
According to tobacco products manufacturers, the tobacco production is worth over Rs 3 billion annually.
The government implemented mandatory pictorial warnings on cigarette packets about the hazards of tobacco consumption, for 75 percent of the products from May, and this coverage is to be extended to 90 percent from May 15, 2015.
Meanwhile, Health Secretary Shant Bahadur Shrestha has described the reported decline in excise duty from tobacco products as an achievement. "Revenue is not the important thing against the health of citizens is the principle behind discouraging tobacco consumption with mandatory pictorial warnings of hazard to health," added Shreshtha.
According to figures from the Ministry of Finance, cigarette production in the country was 11,130 million sticks in 2008-2009.
