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TUESDAY 13 SEPTEMBER, 2011 | RSS Feed

India's cigarette smugglers to stimulate a substantial increase

by USA-Cigarettes.Com | 6 comments

India's cigarette smugglers to stimulate a substantial increase in VAT
September 1, India's West Bengal government will increase cigarette tax from 13.5% to 20%, stop at the tobacco tax will be raised to this week (8.28 - 9.3) modified earlier 30% of the maximum permitted rate.

Tax increases can not change the price paid by many consumers, because tax increases mainly by the cigarette manufacturers and wholesalers to bear. However, tax increases will bring creation to encourage smuggling from other states of the "arbitrage opportunity" to weaken the government for more action to the effect of tax risk.

West Bengal Finance Minister Amit Mitra submitted on August 29, "Financial Proposal" when that tobacco products are allowed to put a value-added tax rose 30 percent plan. The new tax rate has not been specifically defined by the Ministry of Finance announced on September 1.

Smokers purchase price of the most popular brand is expected to remain unchanged, since the maximum retail price can not be changed. In West Bengal four boxes of cigarettes sold in each, there are three boxes of manufactured tobacco in India. Although a state VAT rate is different from a state, but the company the same price in the whole state of Bengal sell all popular brands.

However, other tobacco companies, tobacco companies like 戈弗雷菲利 Phillips, there may also be low-priced brand-level retail price increase.

In either case, if there is no moral principles operators from other states with lower VAT, then smuggled cigarettes, West Bengal, raising the value of these operators to obtain money to open a window of opportunity.

For example, if a gold leaf long branch (Gold Flake Kings) from the adjacent Bangaolisa with 入孟加拉邦, these cigarette smugglers can earn 68 rupees. A smoke than a loaf of bread is not large, law enforcement officers in the trick, you can easily smuggle a lot of cigarettes.

If cigarette manufacturers not to mention all of the tax burden to business were the case, smugglers profit could decline it.

Orissa and Bihar tobacco products tax of 13.5%, Jharkhand's tax on tobacco products tax of 14%, all lower than the state of West Bengal on September 1 announcement of the new tax rate of 20%.

This means that a "tax on tobacco tax havens" will be made along the West Bengal, unwittingly lured traders and smuggling channels to link up, suddenly a small fortune, but deprived of much-needed funds for the state financial revenue.

With other states bordering the region, this problem may be more serious. A tobacco industry executive, said: "In addition to the government closely guarded, otherwise, because of cigarette smuggling and tax impact on."

Tobacco manufacturer Philip Indian Tobacco Company and Ge Fulei tobacco companies declined to comment. Indian Tobacco Association, the governing Udayan Lall said: "We have been asked to reduce the tax burden, eventually, tax increases prove to be achieving the desired goals."

Tobacco industry filed an experienced person of another one worrying areas: the sale of smuggled cigarettes. He said: "High and differential tax rates, smuggling and tax evasion to provide attractive arbitrage opportunities, provided the impetus for the illicit manufacture of cigarettes."

Wholesalers and manufacturers will shift the burden to the retailer is not possible. Observers say the tobacco industry, tobacco companies such as India, the profitability of manufacturers may be affected, they will try to cause the buffer to wholesalers as part of impact. However, some tax increases are expected to be transferred to the trade channels (wholesalers and shops).






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