'Sin tax' leads to huge drop in Abu Dhabi tobacco trade

A new tax on harmful and unhealthy products was introduced in 2017

A pack of cigarettes will cost a minimum of Dh8 from December in the UAE. Antonie Robertson / The National

The introduction of new taxes designed to deter smoking has led to a huge drop in the trade of raw tobacco and related products in Abu Dhabi, statisticians have said.

A 100 per cent excise tax, introduced in October 2017, led to the value of Abu Dhabi’s tobacco trade falling from Dh410 million in 2017 to Dh62.4 million last year, according to a report on state news agency Wam, which cited figures from Statistics Centre - Abu Dhabi.

The figure relates to trade in raw as well as manufactured tobacco products, and reflected the “success of the decision to apply excise tax,” Wam said.

The tax is paid by any business involved in the import of goods into the UAE or the production of goods meant for consumption in the country.

Carbonated drinks are subject to a 50 per cent tax while energy drinks were hit with a 100 per cent tax. The law was intended to drive down consumption of harmful products by causing a significant increase in their price.

Prior to the tax, cheap cigarettes like Chesterfield were about Dh3 per packet while premium brands like Marlboro were about Dh11.

Retailers absorbed some of the cost but top brands now sell for about Dh21.

Most of Abu Dhabi’s tobacco trade came in the form of re-exports, meaning goods that came in to the country were then sent overseas, the statistics said. Re-exports were valued at around Dh57.5 million in 2018, representing 92 per cent of the total trade in tobacco products.