Excise tax: UAE shopkeepers brace for drop in cigarette, soft drink sales

Dubai: Shopkeepers in Dubai are bracing themselves for a drop in cigarette and sugary drink sales after a new Excise Tax came into effect on Sunday.

The price of cigarettes, tobacco products, electronic smoking devices and energy drinks have increased 100 per cent, while sweetened and carbonated drinks have gone up 50 per cent.

Each cigarette now costs at least 40 fils extra meaning a regular pack of 20 cigarettes will cost more by at least Dh8, while a Dh2 sugary drink is now Dh3.

Due to the three-day UAE National Day holidays from December 1-3 clubbed onto a weekend, not all newly priced stock has been delivered. Therefore, shopkeepers haven’t yet felt the full effect of change in prices, but they are expecting noticeable change once the holidays are over.

Delay in delivery

“The delivery hasn’t yet come because of the holidays so we’ve not noticed any difference yet,” said Ajmal EK of Darwish Abbas Hussain Super Market in Al Nahda. “Everywhere is out of stock, we’ve only got a few products on the old prices, but once the newly priced products come we are expecting sales in cigarettes and soft drinks to go down.”

A supervisor at the nearby Baqer Mohebi, who didn’t want to be named agreed, “It’s not noticeable yet, people are still on holiday and the supplier hasn’t delivered, so not all prices are updated, but from our experience of previous rounds of taxation, we are expecting a decrease in sales.”

Public health

Most shopkeepers said that despite sales dropping, the new taxes would be good for public health and the government’s bid to reduce consumption would ultimately work.

“It’s not good for sales but we are inside the UAE and supporting its laws,” said Ebrahim Abdullah, manager of Al Madina in Al Nahda 1. “Cigarettes and soft drinks effect health and increase diabetes and we need a healthy country. In any case our profit from these things is minimal, so on the whole it won’t be a noticeable loss.”

Lany Marayag, from the Mega Mart next door, added, “Some of my relatives have stopped consuming these things now because of the price, so there are benefits to this.

“It will help with the health of the people, but in the meantime it is very difficult to explain to them why the prices have gone up. We have a lot of competition and worry they might go looking for cheaper alternatives elsewhere.”

One shopkeeper Turan Berk from Istanbul Super Market in Al Nahda thought there would be no effect.

“It will be the same, no different, like the last round of taxes, people are asking why, but they will continue to buy juice and cigarettes regardless because they need these things.”

Ali Athiyal from Fast and Fresh in Al Nahda was also expecting minimal change.

“Customers are taking it normally, no one has complained, and there has been no effect on sales. Less people might come in for cigarettes now and ask for singles instead of packs, but otherwise it will be the same as before, no different.”

Rintu Mandal, a store in charge at Al Nahda 2’s West Zone Fresh implied the price changes might force people into the black market.

“Now they will search for alternatives at a lesser price,” he said. “We only know about the brands we are authorised to keep, we don’t know about other things.

“This is difficult on the middle classes,” he added. “Because they used to pay Dh5 for a pack of cigarettes and are now paying Dh11, so they are asking what they will do now.

“If they haven’t read the paper and don’t know about the tax change then it is very difficult to explain to them. Regulars are saying they will go elsewhere, but don’t realise it will be the same everywhere.”

The representative from Baqer Mohebi however said the black market was no longer an option thanks to holograms on every pack.

“No-one can sell these now in shops, there used to be a few before they imposed these taxes but now they have imposed these special holograms that’s stopped all that. I don’t know about any alternative sources.”