What price, vice?
It has now become costlier to smoke and drink in Singapore after Budget 2014 was unveiled on Friday.
Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam announced that with immediate effect, excise duties for liquor and tobacco will be raised by 25 per cent and 10 per cent, respectively.
The increases are expected to yield S$70 million (from tobacco) and S$120 million (from liquor) more revenue a year for the government, according to Tharman.
“Smoking prevalence has increased, especially amongst youths aged 18 to 29,” said the finance minister, adding that the tobacco tax spike aims “to discourage this trend” while for liquor, it is to “keep pace with inflation”.
But almost all the locals Yahoo Singapore spoke to said they would not be stopping either activity anytime soon.
“I’ll still continue smoking,” said Rachel Ann Moreira, 26. “They’ve been raising prices all along and there’s nothing much we can do about it anyway.”
Writer Khairul Amri, who also has no plans to stop lighting up, said he had been “expecting” this for some time now. The last increase in tobacco duties was in 2005 and for liquor, 2004.
“It’s still not clear exactly how this is going to impact the price,” said Khairul. “If it goes up by 30 to 50 cents I won’t mind, but let’s see over the next few months.”
Agreeing with his sentiments was Nurul Hanna, who pointed out that this was merely an extension of the government’s increased clamping-down on smoking in public spaces.
The researcher, who refuses to spend more than S$10.50 on a pack of cigarettes, added: “I might try to smoke less, but I won’t quit. Maybe I’ll switch to cheaper alternatives like ‘rollies’ (loose tobacco leaves).”
This was in fact the primary concern expressed by Ann Hee Kyet, manager of corporate affairs at tobacco giant Philip Morris.
“The tax increase will unnecessarily widen the price differences between cigarettes sold in Singapore and the rest of the region,” he said in a statement. “Cigarette prices in Indonesia are only about S$1.60 per pack for popular brands.”
“Based on our experience with tobacco tax increases in the years 2000 to 2005, large excise tax increases on tobacco fuel the problem of the contraband cigarettes,” Ann noted, pointing to a 93 per cent increase in contraband cigarettes seized and a 24 per cent rise in the number of smuggling cases last year.
Still knocking them back
A spokesperson from liquor company Asia Pacific Breweries also responded to the tax spike with a statement.
“We are surprised by the quantum of increase as an immediate hike in duty by 25 per cent has a significant impact on our business,” said Shannen Fong, head of corporate relations. “We are currently studying the implications and what that means for us and our customers.”
David Sandison, a partner at PwC Singapore, called the tax increase “more damage to an already overpriced F&B industry”.
“When you look at the economic benefits bestowed on Hong Kong by the abolition of (duties on) drinks or wine, this is a baffling move,” he said.
But alcohol consumers Yahoo Singapore spoke to remain undeterred.
“It’s ridiculous. Compared to other developed countries we already have one of the highest prices for alcohol,” said account executive Anand Daniel. “But I’m not going to stop drinking anytime soon.”
Moreira commented: “Alcohol has always been expensive in Singapore – it’s nothing new. We still drink.”
Some also drew a direct connection to the role played by alcohol in the Little India riot last December.
“I think they want to make alcohol less available to the labourers in Little India or Chinatown, who obviously can’t afford to drink as much,” said Nurul.
“The tax increase is less likely to affect white-collar workers. They can probably afford expensive alcohol anyway,” she added.