Brief Summary
This video discusses the recent increase in cigarette prices in Egypt due to changes in the value-added tax law. The increase is attributed to both the Ministry of Finance Tax Authority and manufacturing companies, citing increased production costs. The speaker analyzes the government's justification for the tax, its impact on consumers, and questions whether the collected revenue will truly be allocated to social programs like health and education. He also touches on the implications for local cigarette manufacturers and the broader economy.
- Cigarette prices in Egypt are increasing due to changes in the value-added tax law.
- The government aims to collect 100 billion pounds annually from cigarette smokers to fund social programs.
- The speaker questions the allocation of these funds and the impact on consumers.
Introduction: New Cigarette Price Increase in Egypt
The video begins by announcing a new increase in cigarette prices in Egypt, amounting to approximately 23.5%, which will be implemented over three years. This increase is described as the highest in the history of this essential commodity, affecting around 10 million smokers in Egypt. The price hike stems from two primary sources: the Ministry of Finance Tax Authority and the manufacturing companies themselves, which are facing rising production costs.
Factors Contributing to the Price Increase
The speaker explains that the increase in cigarette prices is due to the Ministry of Finance Tax Authority and the manufacturing companies. Manufacturing companies are facing increased costs for imported tobacco, glue, packaging, printing, and operational factors like fuel and electricity. These factors have collectively led to a cost increase of nearly 25%. The initial price increase has already been implemented, with new prices reflected in the market.
New Cigarette Prices and the Value-Added Tax Law
The speaker provides examples of the new prices for various cigarette brands, such as Merit (105), Malaboro (97), LM (76) and others ranging from 69 to 80. He explains that the price increase is a result of the House of Representatives approving amendments to the value-added tax law. The value-added tax is typically paid by consumers, and the speaker argues that it disproportionately affects consumers in countries where producers are scarce.
Government's Justification for the Tax Increase
The government claims that the tax on cigarettes is necessary to implement new policies and achieve financial balance in the state budget. The goal is to collect 100 billion pounds annually from cigarette smokers, which will then be allocated to social protection programs such as pensions for divorced women and widows, and initiatives promoting a decent life, solidarity, and dignity. The speaker expresses skepticism about whether these funds will actually be used as intended, given the reduction in support for essential goods and services like electricity and fuel.
Critique of Government Spending and Priorities
The speaker argues that the government's claims about using the tax revenue for social programs are not credible. He points out that for every 10 pounds of revenue, 8 pounds go towards paying off debts. He questions whether the increased tax revenue from cigarettes will truly benefit health and education, noting that constitutional percentages for these sectors are not being met. The speaker also criticizes the government's approach to pricing and profit margins for tobacco companies, particularly those with foreign ownership.
Analysis of Cigarette Price Brackets and Tax Structure
The speaker analyzes the government's establishment of price brackets for cigarettes, which aims to guarantee companies' ability to set reasonable prices and maintain minimum profitability. He details the three price brackets for locally manufactured cigarettes and the corresponding tax rates. The first bracket includes cigarettes selling for up to 38 pounds and 88 piasters, with a maximum selling price of 48 pounds. The second bracket ranges from 38 pounds and 88 piasters to 56 pounds and 44 piasters, with prices between 48 and 69 pounds. The third tranche is for cigarettes with prices increasing to 56 pounds and 14 piasters, with a maximum of 69 pounds. The speaker questions why the government doesn't prioritize guaranteeing the well-being of its citizens instead of ensuring company profits.
Future Tax Increases and Additional Goods Affected
The law stipulates a 12% annual increase for a period of three years. The Council of Ministers has the authority to adjust this percentage based on their analysis of the actual costs incurred by the companies. The speaker also mentions that alcoholic beverages are subject to similar tax adjustments. Additionally, a 10% tax has been imposed on petroleum, which was previously exempt.
Contradictions in Government Policies and Fighting Smuggling
The speaker questions the Minister of Finance's claim that the increased revenue will be used for health and education, given the simultaneous increase in prices for contracting work and crude oil. He argues that these increases will ultimately burden consumers. The speaker also challenges the government's assertion that the tax increase is aimed at combating cigarette smuggling, pointing out that smuggling persists despite high taxes.
Concluding Remarks and Call to Quit Smoking
The speaker estimates that the tax increase will generate an additional 100 billion pounds annually, questioning how this revenue will be managed and utilized. He concludes by urging viewers to quit smoking, emphasizing the health risks and financial burden associated with it. The speaker also seeks feedback on the video's format, asking whether viewers prefer the current standing presentation or the previous show format.
