1

Tobacco Tax Policy

Singapore

Dr Theresa Yoong

Director, Adult & Elderly Health Division

Health Promotion Board

Singapore

Literacy Rate 95.4

Land Area 699 sq km

Total Population 4.7 million

Singapore Residents 3.7 million

Singapore

76.8% Chinese

13.9% Malay

7.9% Indian

1.4% Other ethnicity

Literacy Rate 95.4%

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Literacy Rate 95.4

Singapore

Infant mortality rate

Life expectancy at birth

Male

Female

2.6 per 1000 live births

79.9 years

78.0 years

81.8 years

Source: http://www.singstat.gov.sg, Updated on Sep 07

Source: Ministry of Health

Leading Causes of Death

28.3%

24.3%

13.1%

8.1%

0%

5%

10%

15%

20%

25%

30%

Cancer Heart Disease Pneumonia Cerebrovascular

Disease

3

18.3

15.2

12.6

0

5

10

15

20

25

%

1992 1998 2004

Smoking Prevalence (18-69 years)

Smoking Situation in Singapore

To reduce smoking prevalence rates by

Preventing smoking initiation among youths

Promoting smoking cessation among smokers

Protecting non-smokers by eliminating exposure

to passive smoking

National Smoking Control Programme

Objectives

4

MULTI-

PRONGED

Public

Education

Partnerships Legislation

Taxation

Smoking

Cessation

Services

National Smoking Control Programme

Reduce Reduce Supply Demand

Strategies

Taxation Strategies

5

Inversely proportional relationship between

price/taxes and consumption

Particularly effective in preventing young

smokers from moving beyond experimentation

into regular, addicted smoking

Increases likelihood of cessation among current

users

Reduces relapse among former users

Reduces consumption among continuing users

Impact of Tobacco Tax on Consumption

Evidence

A study by the World Bank showed

that for every 10% increase in the

real “inflation adjusted” price, there

will be a decrease in the consumption

of cigarettes by 4% - 8%.

Impact of Tobacco Tax on Consumption

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Singapore’s Tax System

All tobacco products are subject to

Tax goes into Government’s consolidated funds.

excise tax

goods and services tax (GST) 7%

(on the cost, insurance and freight incurred + tobacco tax)

Importer licensed by Singapore Customs and

provides bank guarantee or insurance bond

Importer applies for Customs permit to move

tobacco products from the point of import to a

licensed warehouse

Samples are tested to determine the weight for

computation of duty

Duties and GST are paid before the tobacco

products are released for sale on the retail

market

Tax and Import Procedures

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Tobacco Tax in Singapore

Retail Price 20 sticks

S$

Excise Duty of Cigarettes

S$

Year

9.500.293 per stick of < 1g2004

7.70255 per kgMar 2003

6.50210 per kg2002

6.90180 per kg2001

6.40150 per kg2000

5.80130 per kg1998 - 99

NA14 per kg1983

11.000.352 per stick of <1g2005 - 2008

5.50115 per kg1995 - 98

4.9060 per kg1993

2.8034 per kg1987

3.7050 per kg1991

3.3042 per kg1990

N/AN/A1972

8.500.255 per stick of <1gJuly 2003

Up to Mar 2003 (by weight)

Excise duty on cigarettes was by weight per kg

of tobacco

From July 2003 (by stick)

Excise duty on cigarettes was revised:

Each stick of cigarette not exceeding 1g was levied

a duty of 25.5 cents;

Each additional 1g or part thereof was levied a duty

of 25.5 cents.

Tax Structure in Singapore

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Emergence of low price cigarettes (LPCs) in 2000

LPCs had lower amount of tobacco content and thus

lower weight per cigarette

Shift in consumer behaviour pattern. Sale of LPCs

increased from 6% in 2000 to 25% in 2003

The average retail price for a 20-stick pack of LPCs

was $5.50, while the price for conventional cigarettes

was $6.50

LPCs attracted the young who were contemplating

picking up smoking

Reason for change

Impact of Taxation in Singapore

Real Price Per Capita Consumption

Real Retail Price vs Per Capita Cigarette Consumption

Year

0

1

2

3

4

5

6

7

8

9

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

2004 2005

Real R

eta

il P

rice (

$)

0.20

0.4

0

0.60

0.80

1.00

1.2

0

1.40

1.60

1.80

2.00

Per

Cap

ita C

on

su

mp

tio

n

10 2.20

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From 1985 - 2005

300% increase in cigarette price index (or 3 fold

increase) averaging 4% increase in price per

year

57% decrease in per capita cigarette

consumption (2.15kg in 1985 - 0.73kg in 2005)

10% increase in cigarette price index resulted in

6% decrease in consumption

Impact of Taxation in Singapore

Singapore’s tax at 69% has contributed to a

big price differential when compared to

neighbouring countries.

Smuggling has increased significantly over the

last 2 years.

Will further tax increase lead to increase

smuggling?

Challenges

10

Thank You!