Cigarette prices soar after the government imposes a higher sales taxes on all Egyptian brands. Eastern Company issued a release yesterday announcing an increase in the selling prices for all of its Winston cigarette brands effective on Thursday, June 23, 2011.

The increase is the result of higher sales taxes on cigarettes, in line with Law No. 49 (2011), which stipulates that sales taxes on cigarettes should amount to 50 per cent of the selling price compared to 40 per cent previously.

Eastern Company’s cigarette retail prices will rise by 20 per cent on average, with the cheapest pack of cigarettes (20 cigarettes per pack) selling for EGP5.00 against EGP4.25 per pack.

Eastern Company’s most popular brands, Cleopatra Gold and Cleopatra Box, which collectively represent 60 per cent of its local brand sales, would be sold for EGP5.25 and EGP6.00 per pack, respectively.

The company increased its prices by an average of 8.4 per cent on nine local brands on Mar 23, 2011.

CIGARETTE sales are down by 15 per cent, compared to this time last year but rolling tobacco sales are up 25 per cent, since the tobacco tax hike was imposed in December, a leading importer said yesterday.
The importer, who wished to remain anonymous, told reporters yesterday: “Smokers have abandoned cigarettes in favour of rolling tobacco,” The reason is that rolling tobacco is now cheaper, even with the new tax.

Following a smoking ban at the start of 2010, parliament approved a tobacco tax hike in December, raising cigarette prices by about 40 cents per pack of 20. Rolling tobacco went up about €1.27 for a 50-gramme packet and 64 cents for a 25-gramme packet. The hike was predicted to bring state coffers an additional €31 million.
Before the hike, a packet of Marlboro was €3.90, however it is now sold for around €4.40.
According to this importer, even though rolling tobacco is also taxed it is much less per cigarette. In fact the tax is one third of the tax placed on cigarettes, he said.
The importer highlighted that the decrease in the market combined with smokers moving to cheaper products could lead to a significantly reduced income for the state than predicted by the Ministry of Finance.
“The consumer must understand how much power he has,” said the importer, urging consumers to take the matter into their own hands to change prices by putting pressure on the relevant authorities.