Home » Governance » Govt Okays New Excise Duty On Cigarettes

Finance Minister Patrick Chinamasa has gazetted a legal instrument that seeks to give effect to fiscal measures raising excise duty on cigarettes that he announced in the 2015 National Budget.

The regulations were contained in a Statutory Instrument of a Government Gazette published last Friday.

“The Minister of Finance and Economic Development, in terms of section 225 of the Customs and Excise Act (Chapter 23:02) “hereby makes the following notice 1(i) This notice may be cited as the Customs and Excise (Tariff) (Amendment) Notice, 2014 (No.14.) (2) This notice shall come into operation on the 1st of December, 2014,),” read part of the notice.

Minister Chinamasa increased excise duty on cigarettes from US$15 per 1 000 sticks to US$20 per 1 000 sticks with effect from this month.

He said excise duty on cigarettes was last reviewed on December 1, 2012. “However, the current excise duty rate of US$15 per 1 000 sticks does not reflect the social cost associated with consumption of hazardous substances,” said Minister Chinamasa in his budget statement.

Minister Chinamasa also reduced excise duty on beer from 45 percent to 40 percent effective January next year, a development that is expected to see a dramatic fall in prices of beer.

The move comes after the country’s leading brewer Delta Beverages lager’s volumes over the six months to September collapsed 25 percent in a development that must have triggered the Government to act.

Presenting the US$4,1 billion 2015 National Budget statement, Minister Chinamasa said companies in the sector have undertaken to reduce retail prices.

“Mindful of the need not to undermine recovery efforts by the alcoholic beverage manufacturing industry and also in view of the current depressed aggregate demand for alcoholic beverages, I propose to reduce excise duty on clear beer from 45 percent to 40 percent, thereby stimulating growth in volumes.

“As a quid pro quo, alcoholic beverage manufacturers such as Delta Corporation, have undertaken to reduce the retail price. The introduction of bond coins will go a long way to assist towards this effort.”

Source : The Herald