(MENAFN- Arab Times) A draft resolution on raising tabacco taxes in the GCC, aimed at curbing the increase of smokers could be futile in the six oil-rich states, while the decision could lead to the emergence of illegal trade, experts warn. "I don't think tax would be the solution to problem," Head of the Anti-Forgery section of the Economic Crime Department of Dubai Police Major Khalid Al Hassan said in a report carried by Emirati news agency (WAM) based a round table discussion on the issue held here.
Also attending the round table discussion were Chairman of the British Business Group - Dubai and the Northern Emirates and Managing Partner of Davidson and Co Jonathan Davidson; Omar Obeidat, Partner and Head of Intellectual Property at Dubai law firm, Al Tamimi and Co; and Dr Bruce Budd, Associate Professor, College of Business, Al Faisal University, Riyadh, Saudi Arabia. Maj Al Hassan explained that cigarette prices could not be a problem for smokers who reside in the highincome GCC states. "The UAE is a country where the majority of the population has a high income so they don't care about a price increase," Maj Al Hassan said. "The price of cigarettes is not expensive when compared with other areas of the world. "A price increase may affect some nationalities with a low income but, for UAE locals and expatriates, they don't care." The experts said a sharp rise in cigarette prices did not have any effect in six countries including Japan, Singapore and Canada. They, even, warned that a growth in illicit trade, beyond the control of police and customs authorities, as an inevitable consequence of a sharp overnight rise in the cost of cigarettes.
Increase "You have to consider that a price increase will invite people to trade in counterfeiting," said Omar Obeidat, a law expert and partner at the Dubai law firm Al Tamimi and Co. "If you add on top of that the issue of smuggling, which is a byproduct sometimes of tax increases, you're going to have a double impact of counterfeiting increases plus smuggling increases." Illicit trade creates uncontrolled and unaccountable markets, resulting in children being able to obtain tobacco more easily, and the livelihoods of tobacco retailers being threatened. The experts underscored that the GCC authorities should mull other measures to downsize the number of smokers such as launching awareness campaigns to warn people - especially the young - against the risks of smoking and reinforcing tobacco control by putting in place more barriers to smoking in public places to affect the habits of smokers.
Maj Al Hassan called for a phased increase on tobacco duty over five years, as was the case with the 1995 GCC decision. A gradual approach would give Customs more time to put in place technology to help disrupt the flow of illicit cigarettes and provide valuable data to analyze smuggling trends, he said. According to the UAE English Daily the National, the GCC finance ministers discussed last October in their meeting in Riyadh, Saudi Arabia, increasing tobacco tax after calls by healthcare professionals in the GCC and WHO. But no decision was reached. The daily noted that the GCC first increased its tariff on tobacco imports in 1995 by 100 percent. In the same year, the council voted to reduce nicotine content in tobacco products, and banned production of them in any GCC state. In 2001, health ministers asked the council to increase the tariff by another 150 percent. The request was rejected and the council agreed to focus on other measures to combat smoking.
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