MONTEVIDEO – Uruguayan storeowners believe that a recent hike in the tax on tobacco products to 15.5 percent is aimed more at boosting government revenue than at reducing the number of smokers, trade association head Claudio Orrego told EFE.
President Tabare Vazquez signed last Friday an executive order increasing the tax to 52.22 pesos ($1.68) for a pack of cigarettes, and to 23.26 pesos (75 cents) for a pouch of tobacco.
With the higher rate, a pack of cigarettes that now sells for about 100 pesos ($3.20) – including tax – will cost nearly 15 pesos (48 cents) more.
Orrego said the tax hike will increase demand for black market cigarettes, which go for around 40 pesos ($1.30) a pack.
“This is part of a campaign to increase revenues and the government is using the issue to punish us. It doesn’t solve anything. It encourages the consumption of contraband tobacco, which does not comply with existing regulations and pays no tax,” he said.
“The smoker already has the habit. The smoker who needs to smoke ... when he doesn’t have the money, ends up buying contraband cigarettes,” Orrego said.
Uruguay’s anti-smoking campaign was launched by Vazquez, a practicing oncologist, during his first term as president, in 2005-2010.
Uruguay currently has some 400,000 smokers, compared with roughly 600,000 a decade, according to figures from the National Statistics Institute.
A 2014 report by market research firm Ipsos concluded that black market products accounted for 31.2 percent of tobacco sales in Uruguay.
The World Health Organization says that smoking causes nearly 6 million deaths a year around the globe, with the fatalities including more than 600,000 non-smokers whose illnesses are attributable to exposure to second-hand smoke.