Public Finance Data and Analysis
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The indexation method introduced in 2019 Budget addresses two pervasive problems in cigarette taxation: (a) lack of regularity and consistency in tax increases, and (b) failure to reduce affordability of cigarettes.
However, the Govt. has fallen short of effective implementation by failing to gazette the stated cigarette tax indexation to the lowest priced/taxed cigarette, and by failing to calibrate the taxes on cigarettes with a lower market share. Looking at the history of cigarette taxes suggests that the tussle of interests has resulted in government policies and actions oscillating between “getting it right” and “getting it wrong.” The present Insight sets out how that pattern has once again been repeated in the government’s latest budget and its aftermath.
