Egypt
After years of work, the Egyptian Ministry of Finance finally announced the introduction of the value-added tax (VAT) bill. The submission of the bill to parliament for discussion and ratification provoked immediate controversy among lawmakers, since the bill, if passed, would impose more financial burdens on Egyptians, for instance, the prices of tobacco products would face a 50% hike.
In recent years, the government raised taxes on tobacco products as part of an anti-smoking campaign under the slogan “Those who oppose should quit.”
On July 6, 2014, president Abdel-Fattah al-Sisi issued a presidential decree raising prices on cigarettes ranging from E£1.75-2.75 (US$0.20-0.30) per pack. On Feb. 22, 2015, another presidential decree hiked taxes on local and imported cigarettes 50%, in addition to imposing an extra E£2.25 on the price of each pack sold to consumers at E£10 or less. As a result, smokers with limited income are facing an increase of over 70%.
Ibrahim Imbabi, the head of the cigarettes and tobacco division at the chamber of food industries, told Al-Monitor, “Our division submitted a proposal to parliament requesting amendment of some of the articles of the VAT bill so that the cigarette price increase only targets the rich, thus exempting the poor who consume cigarettes below the price of E£10. In 2015-2016, Egypt made E£43 billion in cigarette revenues. The government is seeking to hike this amount through the new legislation. Certainly, this will lead to a great wave of inflation in cigarette prices.”
In a telephone interview with the TV program “Yom bi Yom” (Day by Day), which is hosted by Riham al-Suhaili, Lt. Gen. Mohab Mamish — the head of the Suez Canal Commission — said that in 2015 the Suez Canal’s revenue was the highest in history at nearly E£40 billion, an increase of E£1.4 billion from the previous year. This, he noted, shows that the Egyptian government makes more money in cigarette taxes than from ships crossing the Suez Canal.