Tobacco tax increase likely

Increasing the tobacco retail tax — one of the world’s lowest at 10 per cent of unit price for domestically produced cigarettes — would deter smokers and increase government revenue while having minimal effect on tobacco producers, Ayda Yurekli, co-ordinator for the World Health Organization’s tobacco control economics unit, told a tobacco taxation workshop yesterday. 

“Cambodia has a huge young population, and the government has to prevent them becoming smokers,” she said. “There is a lot of room to increase government revenue by raising taxes.”

Hang Choun Naron, secretary of state at the Ministry of Economy and Finance, told attendees he could not predict by how much the government would increase the tax.

“We are currently considering the plan,” Naron said. 

He noted that the government must weigh concerns that a tax increase could worsen tax-evasion issues and harm tobacco growers, particularly in Kampong Cham province, the location of most of the country’s tobacco production. 

But Yurekli downplayed the impact, saying WHO data showed that if the tobacco tax were increased, it would make more of a dent in individual buyers’ wallets than in the earnings of large growers. 

Tax Department deputy legal officer Chour Se said Cambodia’s 10 per cent per unit tax was significantly lower than Thailand’s 85 per cent, Vietnam’s 65 per cent, Malaysia’s 25 per cent or Laos’s 15 per cent.

But the idea of a tobacco-tax increase worried Phnom Penh cigarette vendor Tith Rattana.

“Increasing the tax worries me, because it would affect small businesses,” he said.

Another Phnom Penh vendor, Ho Sarum, was more optimistic, saying higher taxation would affect tobacco sales for only one or two months, because a price increase would not stop nicotine addicts from buying his products.