The imposing of cigarette taxes provides between EGP 5bn and 5.5bn annually, most of which will be directed to enhancing healthcare services, according to cabinet spokesperson Hossam El-Kawish.
During the second half of 2014, government revenues from cigarette taxes amounted to EGP 12.4bn, double the Suez Canal profits tax, according to the latest data announced by the Ministry of Finance.
El-Kawish added in a cabinet statement Monday that between EGP 1.6bn and 1.7bn will be directed to health insurance as part of the government’s policy linking any applied procedure for reform to social programmes.
El-Kawish emphasised the decision supports the general state budget to provide expenditure requirements for health insurance and healthcare for citizens.
He pointed out that the latest increase does not exceed 50 piasters for locally produced cigarette packs of all kinds, EGP 1 for foreign packs, and EGP 1.5 for luxury brands.
Average Egyptian family spending on tobacco is EGP 1,063 annually, or EGP 3 a day. This equals 4.1% of total household spending, according to the income research prepared by the Central Agency for Public Mobilization and Statistics (CAPMAS).
El-Kawish added that Egypt is still one of the countries with the lowest tax rates on cigarettes and tobacco generally.
The Egyptian government seeks to implement comprehensive structural economic reforms to save the troubled economy, affected by the volatile political and security conditions over the last four years. The reforms include financial reforms reducing the budget deficit, and legislative reforms to simplify business practice procedures and eliminate bureaucracy, according to a statement from Minister of Investment Ashraf Salman.
He said the decision is consistent with Egypt’s obligations to the Framework Convention on Tobacco Control with the World Health Organization (WHO). The Convention states that governments must make price and tax policies to reduce the effects of smoking.