Burma

Special Goods Tax Debate Flags Booze, Tobacco Price Hike

By Kyaw Hsu Mon 24 December 2015

RANGOON — Parliamentarians are debating whether to approve measures which will significantly raise the cost of alcohol and tobacco from the beginning of the next fiscal year in April.

The special goods tax rate bill includes commercial taxes and provisions for other goods, but most of the draft text outlines specific rates for tobacco and alcohol products as high as 60 percent for many products.

Khine Maung Yi, an outgoing Lower House lawmaker, said the Bill Draft Committee had received numerous complaints about the draft law from local manufacturers concerned about the impact of new taxes on their sales.

“They also said that export tax rate should be reduced as they are looking for foreign markets,” he said. “Lawmakers are still discussing these suggestions at the moment.”

A number of specific taxes are outlined in the bill. A minimum tax of 60 kyats will be levied on a pack of 20 cigarettes with a current retail price of 300 kyats, while 120 percent of the price will be levied on a 20-pack selling for above 3,000 kyats.

A flat 60 percent tax will be levied on tobacco leaves, cheroots, cigars, loose leaf tobacco and betel nut ingredients.

Alcohol taxes will be levied at a staggered rate for alcohol products, beginning at 197 kyats per liter of liquor sold between 501 and 1,000 kyats, and rising to 60 percent of the retail price for products selling for above 10,000 kyats. For imported products, a 60 percent tax on the cost, insurance and freight (CIF) price will be taken on beer and spirits, while a 50 percent CIF tax will apply for wine.

Most imported alcohol is currently prohibited, though its sale is common in some supermarkets and upscale bars catering to foreigners in Burma’s larger cities. Restrictions around the importation of wine were relaxed earlier this year after a temporary crackdown by authorities.

Myo Min Aung, vice chairman of the Myanmar Retailers Association said that he was concerned the new measures would expand the market for smuggled imports of alcohol and tobacco products.

“There are many smuggled products already established in the market. The government is always investigating supermarkets but they should know other local shops and small-scale stores are selling these products,” he said. “We need better law enforcement too if tax rates are to be higher.”

The law, which is expected to be enacted during the current parliamentary session, is expected to begin operating on Apr. 1, according to state-run newspapers on Wednesday. Khine Maung Yi said that lawmakers had framed the bill with the intention of reducing alcohol and tobacco consumption.

“It’s good to know the rate with exact amount in the bill, the law has intended higher prices and less customers for tobacco and alcohol. We agree on that,” he said.

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