Federal budget: tax hikes on cigarettes leave smokers digging deeper

OTTAWA The federal government is substantially hiking taxes on cigarettes, chewing tobacco and cigars a move that is sure to leave Canadian smokers doing a slow burn and raises the spectre of increased contraband sales.

Even so called duty free tobacco won t be spared the tax hike announced in Tuesday s budget They ll now face the same federal excise taxes as domestic smokes and manufactured tobacco.

The government expects to take in an extra $3.3 billion in revenue from the tobacco tax hikes between now and the 2018 19 fiscal year (including $685 million in the 2014 15 fiscal year starting April 1).

The move is sure to spark some ill will towards a government that has promised it would not increase taxes on Canadians, as Ottawa looks to balance the books in 2015, partly on the backs of smokers.

The excise duty on a pack of cigarettes will increase by about $4 per carton of 200 cigarettes, to $21.03 from the current $17, an increase of about 24 per cent. The government says the federal duty on cigarettes has effectively not increased since 2002 and that the hike accounts for inflation.

A corresponding tax hike will also be applied to tobacco sticks, with the duty also increasing to $21.03 per 200 tobacco sticks from the current $17.

The federal excise duty on manufactured tobacco such as chewing tobacco or fine cut tobacco for roll your own cigarettes will rise to $26.29 per 200 grams from the current $21.25. The excise duty on cigars will go to $22.89 per 1,000 cigars, from the current $18.50, and the additional cigar duty will also increase.

The tax hikes take effect Feb. 12.

Taxing tobacco products at a sustainable level is an important element of the government s health strategy to discourage smoking among Canadians, the budget says.

The government is also increasing the duty free excise tax on all Canadian made cigarettes, tobacco sticks and manufactured tobacco for sale in domestic and foreign duty free shops, as well as on imports of these products for sale in Canadian duty free shops.

Currently, a carton of 200 cigarettes receives a $2 excise duty preference compared to a carton in the domestic market $15 per carton compared to $17. The budget changes will see the duty free rate for cigarettes increase to $21.03 per carton of 200 cigarettes, in line with the changes for smokes available in the domestic market.

The duty free rate on tobacco sticks and manufactured tobacco will also increase to the same rate as those in the domestic market to $21.03 per 200 tobacco sticks and $26.29 per 200 grams of manufactured tobacco.

And the tobacco tax hike will continue into the future The government announced that the higher excise taxes will be indexed to inflation and automatically adjusted every five years. The first inflationary adjustment, beyond the higher rates announced Tuesday, will be effective Dec. 1, 2019.

Pamela Fralick, president of the Canadian Cancer Society, said the tax hikes will save lives. Tobacco prices are an important factor in sales, especially with young Canadians, she said.

We want no new smokers. It s not about being against smokers. It s about being against the damage and the tragedy that arise from smoking, Fralick said.

News about tobacco and cigarettes brands. buy cigarettes online.

In Seoul, shoppers at a 7 ll convenience store stare at packs of Kent Convertible cigarettes which have just been launched exclusively in the city. The packs are apparently equipped with different colored flashing lights that are signalling for attention.
In Busan, on the other side of the country, a Korean businessman places several packets of Kent Convertible that he purchased in Seoul that morning on the table in front of colleagues and associates, dispensing individual sticks or entire packets to his enthralled guests.
In an upstairs bar frequented by American expatriates, a visitor is handing out Kent Convertible sticks around the bar, demonstrating the technique required to release the menthol flavor and then increase its strength to a riveted crowd of smokers.
Within three weeks of its launch, BAT’s new Kent Convertibles cigarette had gained unprecedented market share, exceeding BAT’s expectations and attracting smokers to its new smoking concepts, and marking another significant and unique product launch in a country that has been described as a «must win» market for cigarette manufacturers.
The Korean market has become a sort of testing ground for new products and innovative smoke concepts, with brand variants researched, designed and manufactured specifically for the country’s smokers.
The patented flavor capsule technology incorporated in the unique charcoal filter system which lends the filter the ability to «convert» from a regular charcoal filtered light cigarette to a menthol stick, and then to increase the amount of menthol released into the smoke by rolling it between the fingers («click and roll») is claimed to represent the most significant innovation in filter technology since filters were invented.
The product has caught on rapidly, with Korean (and ex pat) consumers buying in to the concept with gusto, proving once again that Korea is a market that embraces change and innovation.
«Korea was chosen as the market in which to launch Kent Convertibles because Koreans love innovation, they are open to new things that add value and functionality in a product,» confirmed Jeremy Flint, BAT Korea’s CORA executive director talking to Tobacco Asia recently. «Koreans love to see high tech functionality in high end products. BAT was looking for something to capture the imagination of Korean consumers. While flavor capsules are not new, they’ve been around for two or three years in other markets the charcoal filter and convertible technology incorporated in the filter which should not be confused with boost products, which have also been around for a while,. offers something unique.»
Clearly, the Korean consumer thinks so as well. Initial sales reports indicate Kent Convertibles gained a market share of over 2.3% in Greater Seoul in key accounts within a month of its launch..
The brand was launched nationwide in mid August, and is expected to continue to show the sort of performance experienced in Greater Seoul as its appeal is clearly in tune with the Korean consumer mindset.


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