Nepal’s Health, Finance ministries lock horns over tobacco taxation

Kathmandu, December 22

Nepal government’s two ministries–of Health and of Finance–have expressed contrasting views on whether to increase the tax rate imposed on tobacco products.

While the Ministry of Health wants to increase the tax, the Ministry of Finance wants the rate to be unchanged for next few years.

“Every year, 25,000 persons die due to tobacco consumption,” Director General at the Department of Health Services, Rajendra Prasad Panta says, “If we can hike the excise duty on the tobacco products, the number of users will decrease and we can save many people’s lives.”

However, Director at Excise Management Section in Inland Revenue Department, Raj Kumar Khatiwada, says increasing the tax will reduce consumption and it will affect the national economy.

Currently, the government has imposed 30 per cent excise duty on tobaccos. The government earns more than Rs 15 billion from tobacco tade in a year.

Panta, however, disagrees with Khatiwada and says the hike in tax rate does not affect national economy. He informs that Bangladesh has been imposing 77 per cent tax on tobacco products whereas the rate in Singapore in 68 per cent. Only 14 per cent population use consume tobacco products in Singapore whereas around 26 per cent population aged 15-69 use tobacco in Nepal.

But, Khatiwada argues the current tax rate is enough as the government has imposed 13 per cent value-added tax too on tobacco products.

The Ministry of Health wants to make Nepal tobacco-free by 2030 so that the country can achieve Sustainable Development Goals. According to its estimation, increasing the tax rate by 10 per cent will result in four per cent decrease in consumption.

Therefore, the tax rate should be increased by around 200 per cent, according to health officials.




Meanwhile, Nigar Nargis of American Cancer Society says Nepal has increased tax on tobacco products by Rs 46 in past eight years and it is too low in comparison with other countries.

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