Categorized | National News

Gov’t Moves To Recoup Lost Tobacco Taxes

The government has come up with a plan to ensure that non-taxed tobacco products do not make it to the local market and at the same time boost revenue and improve public health.

If passed, the Excise Tax Bill would ensure that the tens of millions of dollars The Bahamas loses each year to smuggled tobacco are recouped.

Considering that tobacco attracts an excise tax of 220 per cent, experts have estimated the figure lost to be as high as $25 million.

But, State Minister of Finance, Michael Halkitis is convinced that if effectively implemented, the proposed legislation would ensure that up to 80 per cent of the lost revenue or some $20 million is pumped into the Public Treasury.

Under the law, any tobacco product – be it imported or domestically manufactured – will bear a stamp unique to The Bahamas.

“If excise officers were to go to any premises to do an inspection, they would look for such a stamp. They can electronically track such a stamp, which would be embedded with information about the product, who imported it and when it was imported. The fact that the stamp is on there would be evidence that the taxes have been paid,” Mr. Halkitis said.

“There are penalties for the non payment. So, it’s a very simple process…”

Excise officers will be stationed at all ports of entry.

Mr. Halkitis said local tobacco importers can purchase stamps and have them delivered to an overseas manufacturer to affix to the product.

The cost of the stamp will be fixed. The minister will improve the design of the stamp.

“Back in April 2011, there was a visit by a company who had extensive meetings with suppliers, manufacturers, customs, the ministry, etc. and came up with a plan for implementation, which has begun,” the state minister explained.

Mr. Halkitis admitted that getting to this point called for extensive consultation with the country’s main tobacco importers and manufacturer.

It is the government’s intention to eventually introduce similar legislation to address the whole issue of foreign manufactured beers being smuggled into the country.

Endorsing the proposed legislation, Elizabeth MP, Ryan Pinder said it is evidence that the Progressive Liberal Party government is serious about plugging revenue leakages.

“It is the thought that the elimination of the illegal import of tobacco products will ensure that proper government revenue is collected and could arguably improve the public’s health, ensuring standards on products. It might even reduce the amount of smoking in the country,” Mr. Pinder argued.

But, as far as East Grand Bahama MP, Peter Turnquest sees things, while the intent of the proposed legislation is to generate much needed revenue, it will take a great deal of work for the proposed legislation to be effective.

“The added and more important benefit in my view is controls that will now be put in place to prevent the illegal import of counterfeit tobacco and the sale of such products to minors,” he said.

“As we have seen with the continued breach of the law with respect to alcohol, we continue to have instances where tobacco can be openly bought and sold to minors. In this regard, it my hope that the regulations to accompany this legislation will be very specific with respect to the abuse of the excise franchise and on the penalties to both wholesalers and retailers.

The FNM MP also expressed hope that despite the potential backlash from smokers, the cost of cigarettes and cigars will reach “such outrageous levels” that it would become out of reach for most citizens.

“I believe the benefits of closing a reduction in smoking will help us realise a reduction in the number of cancer and other health related issues among our population especially in the absence of public health information and anti-smoking campaigns,” Mr. Turnquest said.

The government also yesterday pushed ahead with first reading of several Bills, namely amendments to the Business Licence Act, Company’s Act, Partnership Act and Trustee Act.

Written by Jones Bahamas

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