The NGO Cambodia Movement for Health (CMH) and other organisations working on public health welcomed a new directive from the Ministry of Economy and Finance regarding the implementation of a value-added tax (VAT) on imported cigarettes.
This directive mandates cigarette importers and distributors to implement this VAT, and proposes an additional levy of 500 riel ($0.15) per cigarette pack, with the aim of decreasing the mortality rate from smoking in Cambodia.
According to the Ministry of Information, the endorsement was announced during the quarterly meeting of the NGO Forum on Cambodia on August 17.
A study spearheaded by the World Health Organisation (WHO) indicates promising outcomes for Cambodia should this tax be implemented.
The findings suggest that with the introduction of an additional 500 riel tax on each cigarette pack, its prices could surge by 15 per cent.
This hike would likely result in a reduction of approximately 30,000 smokers in the subsequent year and could avert around 10,000 smoking-related deaths over the span of the next 10 to 15 years. It also has the potential to bolster state tax revenues by over $53 million annually.
Cambodia's existing tobacco tax rates are comparatively modest. Domestic cigarettes are taxed at 25 per cent, while imported ones attract a tax of 31.10 per cent relative to their retail price.
To put this in perspective, Thailand has implemented a tobacco tax rate of 78.6 per cent, while the Philippines’ stands at 71.32 per cent, according to data from the SEATCA Tobacco Tax Index.
The implications of amplifying the tobacco tax are twofold. Primarily, it would significantly augment state tax revenue. Secondly, it offers a preventive measure to curtail smoking rates and, consequently, the mortality rate associated with tobacco consumption.
Presently in Cambodia, tobacco-induced ailments claim the lives of 15,000 individuals annually, with 33 per cent of these fatalities witnessed among the lowest-income bracket, as per records from the information ministry.