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Locally produced liquor, tobacco taxes reduced

By Phyu Phyu Zin and Thein Linn
July 19 - 25, 2010

TAXES on locally produced hard liquor and cigarettes have been slashed, a government official said last week.
At the same time, taxes on imports have been increased.

The tax changes took effect on June 1, said U Tun Than, a staff officer of Yangon Division’s Internal Revenue Department (IRD), which is under the Ministry of Finance and Revenue.

Tax rates on locally produced alcohol and tobacco have been cut from 75 percent back to 50pc, while imported cigarettes will now be taxed at 100pc. While the IRD notice was dated June 1, the changes have not been widely publicised.

“We want to support domestic products which are competing against imports,” U Tun Than said.

He added that some domestically produced alcohol and cigarettes can rival foreign products in quality but not in price.
However, one alcohol producer said reducing tax on cigarettes and alcohol was a strange decision.

“I don’t see any reason for it to go down – it’s already too low,” he said.

A shop owner in the Kyauktada township said he welcomed the lower tax.

“Quality is vital for customers and it doesn’t matter where the products have come from. But it’s good if locally made products are taxed at lower rates,” he said.

However, one parent whose son is in high school, took a dim view of the change.

“Reducing taxes on liquor and cigarettes is good for customers I suppose but is this decision a good one for the health of our children and students?” he asked.

The IRD announced in March 2007 that all imported alcoholic beverages and cigarettes would be required to carry “Tax Paid” stickers. Those stickers became mandatory on locally produced products in April 2007.

“We have many competitors already and the cost of raw materials is quite high and we can’t increase our prices,” a Standard Whisky spokesperson said last week.

“The tax cut is helpful for manufacturers – it’s good news for us,” said U Thein Win, the commercial director of Peace Myanmar Group (PMG), a local alcohol producer.

The tax cuts have been accompanied by a number of raids in Yangon and Mandalay last week for violations of the tax law, one producer said. No further details were available at the time of printing.