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Cigarette tax hike is Indian government’s ‘biggest achievement’ of first 100 days

| September 3, 2014

The Economic Times of India has said that the biggest achievement during the first 100 days of the new Indian government has been the imposition of the largest-ever hike in excise duty on cigarettes.

As was reported here on July 16, the Indian Finance Minister, Arun Jaitley, steeply increased excise taxes on cigarettes as part of the 2014 Budget

The specific tax on cigarettes was increased by 11-72 per cent, depending on the length of the product, with similar hikes being made on cigars, cheroots and cigarillos.

Excise was increased from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco, and from 60 percent to 70 percent on zarda scented tobacco, gutkha and chewing tobaccos.

Shortly after the budget announcement, the Tobacco Institute of India said the steep duty increases on cigarettes, coming as they did on the back of sharp rises in the previous two years, would provide a further fillip to the growing illicit trade in India, which already accounted for 19 percent of the cigarette market.

Public health experts, however, say the hikes will not only boost revenue generation but also help reduce the nation’s disease burden, particularly cancer, by dissuading people from using tobacco products.

About 275 million Indians (35 percent of the adult population and 14 percent of children aged 13-15 years) are users of tobacco, mainly smokeless tobacco.

Korea looking to raise cigarette prices

| September 3, 2014

South Korea’s Health and Welfare Minister, Moon Hyung-pyo, said yesterday that he hoped to see cigarette prices nearly doubled during the next six years so as to reduce the country’s smoking rate, according to a story in The Korea Herald.

Moon said prices should be raised to at least WON3,300 ($3.24) per pack immediately, partly to reflect the general rise in consumer prices, and to WON4,500 by 2020.

The average price of cigarettes among OECD (Organization for Economic Co-operation and Development) countries is $6.40 per pack, but more than 70 percent of the cigarettes sold in South Korea are priced at $2.46 (WON2,500) per pack or less.

The most recent price increase on cigarettes – WON500 per pack – was brought in during 2004.

“I believe we must actively work to cut the country’s smoking rate if we believe that the high smoking rate is becoming a serious issue,” Moon said.

“The most effective policy is to raise the tobacco tax,” he said, noting that the country’s overall smoking rate had dropped by about 15 percent when the government raised cigarette prices in 2004.

This is not a new story. In the middle of June, the Herald reported that the health ministry was planning to raise cigarette prices.

The June announcement came after the country received a notice from the World Health Organization that Korea should raise cigarette prices by 50 percent.

US flue-cured auctions open to low prices

| September 3, 2014

Prices were low at the US’ first flue-cured auction of the season at Old Belt Tobacco Sales, Rural Hall, North Carolina, on August 26, according to a story by Christopher Bickers in his Tobacco Farmer Newsletter.

‘About 125,000 pounds (out of 200,000 offered) sold in the range of $1.10 per pound, with a practical top of $1.50,’ said Bickers.

’This was way below the average of 2013, and there was considerable tag tearing [farmers refusing to accept the prices offered].’

Thailand might legitimize e-cigarettes

| September 3, 2014

Authorities in Thailand might soon regulate and levy taxes on shisha tobacco and electronic cigarettes, according to a Phuket News story quoting officials at the Ministry of Finance.

Neither product is currently registered under any Thai laws; so both are illicit before the law.

However, shisha, known in Thailand as baragu, is increasingly popular among Thais and widely sold in nightclubs and restaurants; while electronic cigarettes have recently entered the Thai market.

Thai officials believe that amending the Tobacco Act of 1996 to include shisha and electronic cigarettes would allow the state to legitimize, regulate, and tax these products.

22nd Century Group is new MSA member

| September 3, 2014

22nd Century Group said yesterday that it had become a member of the US tobacco Master Settlement Agreement (MSA) through the acquisition of NASCO Products, a federally licensed tobacco product manufacturer and participating member of the MSA since 2005.

In a story for Benzinga.com, Eddie Staley said that with 22nd Century’s super-premium priced brands RED SUN® and MAGIC® having become MSA products, the company would ramp up production within the next 30 days and would launch sales and distribution efforts across the US.

Since the introduction of 22nd Century’s brands in early 2011, sales have been intentionally curtailed by the company in order to limit the complexity and costs associated with becoming a signatory of the MSA.

“We are very pleased to have been approved by the Settling States as a participating manufacturer of the MSA so that we can now sell our brands under the MSA, which will assist in producing sustainable revenue for the company,” said Joseph Pandolfino, founder and CEO of the 22nd Century Group.

BAT Uganda to quit lowly leaf business

| September 2, 2014

British American Tobacco Uganda (BATU) is to discontinue its leaf growing and export business after 86 years with the loss of 147 jobs, according to a story in New Vision.

BATU’s managing director, Jonathan D’souza, was said to have told reporters that the decision to quit was reached after the company’s biggest client, British American Tobacco Global Leaf Pool Ltd, had decided instead to use Alliance One International.

“We will now focus on importing and distributing cigarettes and growing our brand equity,” he said.

Tobacco was an agricultural crop, and like any agricultural crop it was affected by many risks, especially weather changes, said D’souza. It was also a low-return business.

“I do not think the shareholders should be disappointed,” he was quoted as saying.

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