Sin tax is good for you ‑ and economy
June 15, 2019 | 8:40 PM
by Times News Service

Muscat: A new tax on products deemed harmful to health came into effect yesterday, (Saturday) with many hopeful the new rule could help to save lives.

Economists, doctors and members of the public who took part in a Times of Oman online poll agree there are health benefits to the 100 per cent levy on alcohol, tobacco, energy drinks and pork products.

From yesterday, the cost of a pack of cigarettes in Oman rose from an average cost of OMR1.2 to OMR 2.4.

Energy drinks, pork products and alcohol also doubled in price overnight. Carbonated soft drinks like Coca Cola rose by 50 per cent.

The excise tax was implemented yesterday on Saturday, June 15, in accordance with the Royal Decree No. 23/2019.

The new excise tax is expected to bring in up to OMR100 million a year to help balance Oman’s books.

A 330 ml can of soda used to cost 150 baisa but since yesterday that price has increased to 225 baisa.

Dr Saleh bin Said Masan, Chairman of the Economic and Financial Committee at the Shura Council, spoke to Times of Oman regarding the effects the tax will have on the economy.

“Most of the expected effects of the selective taxes are positive as the main premise of this law stems from the principle of rationalisation of the consumption patterns of some goods which are harmful to the environment and to public health. “Economic forecasts indicate that the consumption of these commodities will decrease during the first year of application of the law by 15 to 20 per cent, which will improve public health levels in the Sultanate while reducing the bill for treatment costs of diseases which arise from the consumption of these commodities.

Reduce imports

“The decline in demand for these commodities will reduce the volume of imports from abroad and this in itself will lead to an improvement in the sultanate’s trade balance.

“The implementation of this law will expand the tax base by providing the public budget with a new source of revenue of OMR100 million annually. Thus, the final result of applying the selective tax is positive,” said Dr Masan.

Another Shura Council Member Hilal Al Sirdani, from Sohar, added: “It is a tax imposed on goods harmful mainly to human health, such as alcohol, tobacco, soft drinks and energy drinks. Many countries impose similar taxes on these types of things. There are positive effects of this type of tax as it contributes to the reduction of the use of goods harmful to health. It also provides revenue to the state, and these revenues can be directed to the development of health care and provide high quality services.”

Doctors in Oman have also welcomed the government’s decision to levy the excise tax on tobacco products, energy drinks , alcohol and pork.

Dr Rajagopal. T. Naganathan, who works in a private clinic, said: “More taxes means some people will definitely cut back on these products.

“All these are very bad for health. Cigarettes contain nicotine which is bad for human consumption as this can lead to cancer.”

A Times of Oman poll conducted online had mixed reactions to the new tax.

Many people on social media have voiced their opinions regarding the tax. A citizen said: “Since the revenue from the tax will be OMR100 million then that can be used to help build hospitals and schools and reconstruct roads.”

Others did not mind paying the added cost. One reader said: “ The tax will help support the country and if I continue to pay for the product I will be supporting my country.”

An expat living in Oman said that the introduction of such taxes is not uncommon compared to the rest of the world.

“In our country, we fund free healthcare for the poor by collecting high taxes from both liquor and cigarettes.”

Another expat remained positive that the tax will help consumers, saying: “This tax will change your life for sure.”

All firms who stockpiled goods which fall under the new Sin Tax regulations were given 15 days to declare the stock and pay the tax in full.

Excise goods

According to a government statement: “Any companies that have a stock of excise goods at the date of the law going into effect must declare the value of its stock and pay the tax for it within 15 days of the tax coming into effect,” according to a notification issued on Tuesday. This includes retailers, hotels and restaurants or any other commercial merchant with stocks of alcohol, carbonated and energy drinks, and pork products.

Companies that try to dodge the tax could face fines as high as OMR20,000, as well as a three-year jail sentence.

There are a number of people who are exempt from paying this tax, such as, people travelling into Oman with their own products for personal use, so long as the value of the products does not exceed OMR300.

Furthermore, the number of cigarettes exempt from the fees must not exceed 400 cigarettes.

Government and diplomatic officials will not have to pay the tax, so long as the same applies to Omani organisations.

These bodies may also apply for a tax return on products bought from the local market if they have already been taxed.

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