Jamaica: long awaited increase in tobacco tax rate

Dr Peter Phillips, Minister of Finance of Jamaica, announced in the Parliament today an increase of 14.28 per cent in the Special Consumption tax (SCT) on cigarettes.

As a result of the move, the SCT rate applicable from tomorrow is $12,000 per 1,000 sticks, up from $10,500.

The move of Jamaica is compliant with the country’s obligations under the WHO Framework Convention on Tobacco Control (WHO FCTC), to which Jamaica is a Party since 2005. Article 6 of the treaty requires Parties to implement tax policies on tobacco products so as to contribute to the health objectives aimed at reducing tobacco consumption.

The Conference of the Parties, the supreme decision making body of the FCTC unanimously adopted, in October 2014, guidelines for implementation of taxation policies.

The adopted guidelines underline that “tax and price policies are widely recognized to be one of the most effective means of influencing the demand for and thus the consumption of tobacco products. Consequently, implementation of Article 6 of the WHO FCTC is an essential element of tobacco-control policies and thereby efforts to improve public health. Tobacco taxes should be implemented as part of a comprehensive tobacco-control strategy in line with other articles of the WHO FCTC.”

One of the main recommendations of the joint needs assessment mission undertaken jointly by the Convention Secretariat (WHO FCTC), the PAHO and the Government of Jamaica last summer, also referred to the need for the upward revision of the current SCT rate to make up for the losses incurred during the past four years as a result of high inflation, and meet tobacco consumption reduction targets. The findings of the mission as well as the actions needed were reviewed by an intersectoral meeting on 4 March 2015.

The tax rate has not been increased in Jamaica since 2010. Due to the high inflation rate during 2010-2014 (between 7 and 10% annually), the tax has been eroded in the last five years, resulting in a reduction of the tax value in real terms.