Cambodian government considers raising duty tax on local cigarettes

The government is considering a tax increase on cigarettes in Cambodia. It is currently 10% which is one of the lowest tobacco taxes in the world. A packet of twenty local ARA cigarettes costs around $0.32 in Phnom Penh. 15 year-old Resmey Veng.

Unlike the young boy above, this smoker will never see any tax increase because he only smoke foreign import 555 cigarettes

September 18th, 2012
By Stephen Ford
Demotix

A packet of local Cambodian ARA cigarettes costs 1400Riel, around £0.22. Government tobacco tax on local products is currently 10%. Smoking and drinking is endemic in the poor youth of Cambodia and tax hike is proposed to cut the addiction.

Ayda Yurekli, an academic from the World Health Organization, told a conference in the capital yesterday that: "Increasing tobacco retail tax would deter smokers and increase government revenue," and that "Cambodia has a huge young population, and the government has to prevent them becoming smokers. There is a lot of room to increase government revenue by raising taxes.” [Phnom Penh Post today]

A packet of Cambodian produced ARA cigarettes costs around one third of a US dollar. Government tax on cigarettes in Cambodia is currently 10%. Neighbouring Laos taxes smokers 15%, Thailand 85% and Vietnam 65%.

Would a large tax hike on tobacco products prevent poor smokers from smoking and improve the populations health and life span? Will it stop young children from poverty ridden families starting to smoke? (The average Khmer life expectancy according to unicef is 63 years.)

I went to a community in the city to chat to some young smokers and to garner their opinion. What would be the effect on them of raising the tobacco tax in Cambodia? What impact would a massive increase on tobacco tax have on less well off citizens who smoke? Does anti-smoking education in Cambodian society have a direct impact on young smokers?

Resmey Veng is 15-years-old. He lives in a community surrounded by poverty and was raised by a woman he calls mother. He does not attend school having left elementary school before he graduated. He works for around 8 hours each day carrying bricks on a construction site. The legal age for smoking in Cabodia is 18-years.

We chatted when he ran into his home for a break as the heavens opened and work had to stop. He held 3 cigarettes which he had just purchased from a local store next to his home.

"I have smoked since I was 13 years," he tells me and continues "I get 5 dollars a day for hard work and its heavy [building] work."

Why did you start to smoke and drink alcohol?

"I started smoking and drinking Khmer wine because I follow my friends what they do. We smoke and share a 2000Riel ($0.5) bottle of [red] khmer wine everyday."

Do you know that smoking damages your body?

"On the packet it tells you that 'smoking gives you cancer' but I usually only have the money to buy 3 cigarettes at a time from the shop so I dont often see the packet. 3 cigarettes costs me 500Riel and thats what I buy."

If the government increase the price of cigarettes to 400Riel (a dollar and 3 times current cost) will that stop you smoking?

"Never. I will smoke whatever the cost. I will just think that the government make the experience not good for me."

Did they tell you anything about smoking and your health when you were at school?

"Yes the teacher said that smoking is bad for you. I dont feel anything bad though when I smoke so I dont know if its true."

Khmer wine is sold in recycled plastic bottles. They bring the wine to the capital in Taxis from Svey Rai province and sell it on stalls. It's nose is strong, coarse and methanolic to me but I'm no wine buff.

Do you know that the wine is harmful to drink I ask the teenager?

"Yes I know that many people die from drinking too much wine. It breaks liver and gives cancer."

Why dont you drink Angkor or Anchor beer?

"It's just too expensive so we drink cheap khmer wine instead."

I am sure that Ayda Yurekli's comments yesterday are based on well documented anti-smoking research. It's possible that a hike in Cambodia's tobacco tax would "deter" some smokers and would "increase government revenue." I'm no economist but maybe it could be a 'revenue status quo' if a higher tax income per cigarette was offset by a real reduction in smoking volume?

If there was an observable increase in the governmental monies raised by taxing smokers, would the monies be ring fenced and to what use would the extra cash be put to? Would it be used to fund anti-smoking health education campaigns? Or to Police the stalls which sell tobacco to underage individuals? Or to fund additional anti-smoking materials available to schools? Or to compensate tobacco manafacturers and factory owners for their loss of revenue? Or to fund the government machine as a revenue generator?