Smokers and lovers of sugary drinks will find their wallets significantly lighter this Sunday – but will hopefully emerge much healthier and fitter as a result.
In a landmark move, the price of tobacco products and caffeinated drinks is to double with the introduction of what has been labelled a “sin tax”, while sugary soft drinks will be subject to a 50 per cent increase in excise duty.
The Government hopes pushing up prices will encourage people to turn away from unhealthy products like cigarettes and fizzy drinks, which place a heavy burden on the health service and contribute significantly to diseases like diabetes and cancer.
The new taxes will also contribute millions of dirhams to the UAE budget and will be followed by the introduction of VAT of five per cent on many products and services in the New Year.
The UAE is the second country, after Saudi Arabia, to attempt to deter the consumption of unhealthy products with steep price increases, with many other governments around the world considering similar tactics.
The prices of tobacco products and sugar-high drinks in the region have long been among some of the lowest in the world, with the hope now that making them more expensive will encourage consumers to think twice about buying them.
The new excise duty charges will push the price of a can of cola to Dh2.25, while the more expensive brands of cigarettes will rise to around Dh22 for a pack of 20, although this is still significantly cheaper than many industrialised countries.
Doctors have welcomed the move, but warn that smokers in higher income brackets may not be deterred by paying more for their habit.
“Price is not an issue for long term smokers who are addicted, but it may help those on lower incomes to give up smoking,” said Dr Mohamed Maki Shalal, head of accident and emergency at the Canadian Specialist Hospital in Dubai.
“A tobacco tax is a sign that the approach towards smoking is changing, that is positive.”
Hospitals and clinics have called for extra revenue generated by new taxes to be spent on awareness programmes in schools and to improve smoking cessation support.
When the announcement was made, Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance, and Chairman of the Federal Tax Authority, said the project aims to diversify revenue streams and boosts government resources.
“This tax is set to discourage the consumption of products that negatively impact the environment and, more importantly, people’s health,” he said.