Whose benefit is the increase in cigarette tax in Iran?

The addition of a new tax (in addition to the value added tax) on each pack of cigarettes and each 50-gram pack of chewing tobacco in the budget law of 1402 left its effects on domestic production, causing a 50% drop in production and 90% in exports in the first four months of this year. All types of tobacco and also the production of cigarettes decreased, and on the other hand, it led to the boom of smuggling and counterfeit production of tobacco products. Have the policymakers weighed all the pros and cons of increasing the tax on tobacco products? The Majlis Research Center has investigated this issue in a report.

In the budget law of 1402, another tax has been imposed on each pack of cigarettes and each pack of tobacco in addition to the value added tax on cigarettes and tobacco. In a report, the research arm of the parliament has examined the cigarette tax rate in other countries and compared it with Iran, as well as the effects of this policy on components such as smuggling and tobacco consumption, and has made suggestions in this regard.

Cigarette tax in budget law 1402

Tax on cigarettes and tobacco is one of the indirect taxes that is considered as a kind of consumption tax. The importance of examining this issue is important in the sense that the amount of this tax and its impact on components such as the health and hygiene of the society, the reduction of smoking and the amount of tobacco smuggling, confronts the society with challenges.

The domestic cigarette tax rate was set at 25% in the value added tax law approved in 1400, which is increased by 5% every year.

But this year, another tax has been added, so that since the beginning of 1402, the retail price of each domestically produced cigarette with an Iranian mark is 50 Tomans, domestically produced with an international mark (brand) is 100 Tomans, and each 50-gram pack of domestic hookah tobacco is 20,000 Tomans as an additional tax and 800 Tomans for each imported cigarette and 35 thousand Tomans for each 50-gram pack of imported hookah tobacco is received as input tax, and finally, this tax revenue is directed to the health sector with priority for the construction and equipping of infertility centers and government maternity hospitals. Public sports and women’s sports are paid for.