Proposal for 2019-2020 Budget
In the context of the pre-budgetary consultations for the 2019-2020 budget, VISA wrote to the Prime Minister of Mauritius informing him of the review carried out in 2018 by the University of Cape Town, University of Mauritius and the non-governmental organisation on the excise taxes on cigarettes in Mauritius. The review could assist government in generating substantial revenue and decreasing tobacco consumption. The review team included ProfessorCorné van Walbeek, eminent economist and tobacco tax expert.
According to the review, although the tobacco tax system in Mauritius follows the international best practice, with a simple and uniform specific excise tax, it has not succeeded in reducing tobacco consumption substantially and optimising revenue for government. Between 2009 and 2017, the tax increased by almost 80% in real terms but the quantity of cigarettes sold decreased by only 2%, indicating that the tax increase was not high enough to counter the increase in income.
The review proposes 3 policy options for reducing tobacco consumption and increasing government revenue. These options were summarised in the table below:
| Excise tax increase 2019 -2022 | % Increase in tax revenue (2019- 2022) | % Decrease in consumption | Increase in price of a pack costing Rs 102.20 in January 2019)
|
| Option 1:
15% increase annually up to 2022
|
46% | 15% | Rs 178.75
(in June 2022)
|
| Option 2:
40% increase in 2019 followed by 15% annual increase up to 2022
|
64% | 20% | Rs 217.60
(in June 2022) |
| Option 3:
30% increase in 2019 followed by 20% annual increase up to 2022
|
69% | 22% | Rs 229.58
(in June 2022) |
At a time when smoking prevalence is high in Mauritius – 38.5% among adult males – these policy options offer enormous possibilities to reduce tobacco use and non-communicable diseases as well as expenditure on tobacco-related diseases which represents an increasing economic burden to government. According to the World Health Organisation, increasing taxes and prices is the single most effective tobacco control measure.
In view of the above, VISA appealed that due consideration be given to the recommendations of the above-mentioned report and taxes on tobacco products be raised in the forthcoming budget.
A copy of the report was attached.
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