Domestic Economy

Time to Raise Taxes on Cigarette

Business & Markets Desk
With cigarette tax standing at 11% in Iran, the country is among the 10% of most affordable countries to smokers
Iranians spend up to 80 billion rials ($1.77 million) on smoking daily.
Iranians spend up to 80 billion rials ($1.77 million) on smoking daily.
Studies show a 10% rise in tobacco tax results in around 4% decrease in cigarette consumption in countries with high levels of per capita GDP and a 5% decline in low- and middle-income countries

From a moral standpoint, policymakers should not prioritize the interests of powerful economic entities over public welfare. However, when it came to deciding the cigarette tax rates last week, the Iranian Parliament failed to adopt such a position. 
Lawmakers rejected the modest proposal included in next year’s budget bill (March 2018-19) on raising cigarette tax rates—a 350-rial (0.77 cents) tax hike in retail prices of locally and jointly produced Iranian cigarettes and a rise of 500 rials (1.1 cent) in retail duty of imported cigarettes. They replaced the proposed rates with the dismal hikes of 75 rials (0.16 cents) and 150 rials (0.33 cents) for locally and jointly produced Iranian cigarettes respectively and a rise of 600 rials (1.3 cents) in retail tax of imported cigarettes. 
A letter of protest by local cigarette producers and distributors to the parliament suggested that high taxes on cigarettes cause a surge in smuggling, hurt local production and hamper employment.


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