Some retailers increase cigarette prices following tax hike
February 20, 2018
SINGAPORE: Smokers are already feeling the pinch after the latest hike in tobacco tax, as some retailers have already raised cigarette prices.
On Monday (19 Feb), Finance Minister Heng Swee Keat announced a 10 per cent increase in excise duty on all tobacco products, in a bid to discourage people from smoking. According to a circular from Singapore Customs, the increase took effect from 5.40pm on Monday.
The excise duties on cigarettes would increase to 42.7 cents per stick of cigarette, up from 38.8 cents previously, said the Ministry of Finance.
Of the six retailers that Channel NewsAsia approached, two of them said they had already increased the price of a pack of 20 Marlboro cigarettes by S$1.10. Channel NewsAsia understands this is the recommended price increase by supplier Philip Morris.
The other four shops said they plan to increase prices on Wednesday.
Chairman of the Minimart Association, Alan Tay told Channel NewsAsia Philip Morris had given a recommended price of S$14.10 for a 20-pack of Marlboro cigarettes, up from S$13.00. This is a price increase of about 8.5 per cent.
Mr Tay said the rest of the suppliers were mostly closed due to the Chinese New Year holidays, and would likely send their revised price lists on Wednesday.
Mr Tay saw a rush of smokers purchasing cigarettes at his shop after Mr Heng’s announcement on Monday evening. Many regular customers bought cigarettes by the carton, instead of the usual one or two packets a day and supply was running low, he said.
But other retailers said business was steady, with no noticeable rise in sales. One customer who was purchasing about 10 packs of cigarettes told Channel NewsAsia the price increase would not stop him from smoking less. He said he has been smoking for a number of years and it was a difficult habit to curb.
Meanwhile, a 7-Eleven spokesperson said that "a price increase for these products is expected, though we are unable to advise on the quantum of the increase at this point as we're still working with suppliers on this".
NTUC FairPrice also said its tobacco prices "remain unchanged as of today, pending further review with our suppliers". A check at a Sheng Siong supermarket on Bedok Reservoir Road revealed that the price of a 20-pack of Marlboro cigarettes had increased from S$12.70 to S$13.80.
With the latest hike, the Finance Ministry said Singapore's tax on a "typical packet of 20 cigarettes” now stands at about 60 per cent, before GST. This is on par with countries like the United Kingdom, New Zealand and Canada.
It said tobacco duties for cigarettes and other manufactured tobacco products were last raised in 2014, and that this latest tax hike is aimed at discouraging and reducing the consumption of tobacco products, rather than raising revenues.
According to the World Health Organisation, a 10 per cent increase in the price of cigarettes results in a 4 per cent decrease in demand in high-income countries, and about a 5 per cent decrease in demand in low- and middle-income countries.
In response to media queries, a spokesperson from the Tobacco Association of Singapore (TA) said that its member companies are still reviewing the impact of the Government’s decision to increase tobacco excise taxes and how it affects the illegal tobacco market.
“The TA has always maintained the view that excise tax increase has a direct correlation on the level of illegal tobacco which is smuggled into Singapore given the price disparity (with) neighbouring countries," the statement said.
"It is our view that illegal tobacco deprives government of tax revenues, defeats public health objectives and has become a source of illicit revenue for organised crime syndicates,” the spokesperson added.