MoH recommends hiking excise duty on tobacco products

Kathmandu, April 30

The Ministry of Health (MoH) has proposed the government to hike excise duty on tobacco products through the budget for fiscal year 2018-19.

As Ministry of Finance (MoF) is busy in budget preparations, which is expected to be tabled at the Parliament on May 29, MoH has recommended MoF to increase excise duty on tobacco products (cigarettes, packaged chewing tobacco and gutkha, among others) to at least 70 per cent.

Currently, the government is levying 35 per cent excise duty on tobacco products.

Increasing taxes on tobacco products would not only increase the government's revenue, but will make tobacco products dearer in the domestic market and discourage its consumption, according to MoH officials.

Tobacco consumption is the main cause of cancer and heart diseases, according to various researches.

Statistics of Nepal Rastra Bank (NRB) show that Nepal imported tobacco products worth Rs 1.70 billion in the first eight months of the ongoing fiscal year. However, consumption of tobacco products has been on decline in the country since the past few years, along with increasing health awareness among people and different government initiatives to discourage its consumption.

As per available government data, Nepal imported tobacco products worth Rs 1.85 billion in the first eight months of 2015-16. Similarly, tobacco products worth Rs 1.79 billion were imported in the country during the same period of 2016-17.

MoH has attributed the decline in consumption of tobacco products to different health warnings that the government has made mandatory in the packets of tobacco products in the recent years.

Back in 2016, the government had amended the ‘Directives for Printing and Labelling of Pictorial Warning Message and Graphics in the Boxes, Packets, Wrappers, Cartons, Parcels and Packaging of Tobacco Products-2011' to increase the coverage area of pictorial warning from 75 per cent to 90 per cent.

“Consumption of tobacco is an important cause of various non-communicable diseases in Nepal. We are optimistic that the government will increase excise duty on such products through the budget,” said Pushpa Chaudhary, secretary at MoH.

Meanwhile, MoF is positive towards increasing taxes on tobacco products through the upcoming budget. Though MoF officials were unwilling to disclose the new excise duty on tobacco products, a MoF source confirmed that excise duty on tobacco products will be reviewed.