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Abu Dhabi, UAEMonday 25 June 2018

Northern Emirates retailers yet to determine cigarette tax impact due to supply shortage

However, some say sales of energy drinks, which was also hit with a 100 per cent tax, have dipped by about 30 per cent

Excise tax was introduced across the country on October 1 in a bid to diversify the Government’s revenue streams and discourage the consumption of products that harmed the environment and public health. One week after the ‘sin tax’ took effect, The National visited tobacconists and supermarkets to assess the effects the federal tax has had on consumers and trade.

A cigarette supply shortage from last month has meant that the impact of the 100 per cent excise tax is still unclear for many retailers in the Northern Emirates.

However, estimates for the sales slump in energy drinks is about a 30 per cent drop for some, while sales of soft drinks, which face a 50 per cent tax, have taken a 5 per cent hit in some shops.

“We have few cigarettes in stock but the demand has dropped and people are looking for cheaper options. For example, some who used to take Marlboro are switching to other, cheaper brands like Gauloises, L and M or Winston,” said Sahil Shikh, the manager of Alam Supermarket in Fujairah city.

“We witnessed a slight drop in energy drinks and soft drinks demand but during the upcoming weeks we will have the exact figures as it’s hard to judge the situation now.”

A manager at Fatima Shopping Centre in Fujairah said that demand for cigarettes and energy drinks had dropped by about 30 per cent.

“A lack of cigarettes in stock and the new tax has affected sales and it’s not clear if smokers are considering quitting or thinking of changing brand to a cheaper one,” said the manager, who did not want to be named.

He added that soft drinks sales are still the same.

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Excise tax: one week on

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UAE tobacconists unsure if dokha falls under new excise tax regulations

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In Ras Al Khaimah, it was a similar picture, as a lack of supply meant drawing definitive conclusions on the impact of the tax was not yet possible, though it had given some smokers pause for thought.

Agay Kadankatu, the manager of Fathima Hypermarket, said that they have been facing issues with cigarette suppliers since last month.

“Although we don’t have much in stock due to some issues with the cigarette suppliers, it is clear that many smokers have decided to cut down on their consumption,” he said.

“It’s a very good move and I encourage it a lot. It will help smokers quit and live with good health, along with energy drinks consumers.

“Our cigarettes and energy drinks sales have dropped since October 1, and we are encouraging customers to buy healthy food instead.”

Gohir Shara, a Pakistani shopkeeper working at Jihad Supermarket in Fujairah, said they also have limited stock, which they are still “selling with the regular price, without tax”.

“We also have energy drinks stocks with the regular price, while the demand on soft drinks has become less, by about 5 per cent,” he said.

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Read more:

Cigarettes and energy drinks to double in price on October 1

High prices and low stocks hit UAE's ardent smokers

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Some smokers say they are either looking for cigarettes with cheaper prices or some are thinking about quitting altogether.

“It’s a huge hit for all smokers and it will impact my income personally, therefore I started cutting my consumption and hopefully it will work,” said Ahmad Jalal, a 28-year-old Egyptian salesman in Fujairah.

Nida Al Ramahi said she is glad that her son will slowly stop buying energy drinks.

“My son is somehow addicted to energy drinks and this move will definitely make him cut it from his life,” said the 49-year-old Palestinian mother of five.

“I was so happy with the decision and it will help many people to get rid of bad habits that affect their health in the long run.”