Oman to double price of booze and cigarettes in new 'sin tax'

Oman to double price of booze and cigarettes in new 'sin tax'
Oman is hoping to boost state revenues by introducing a new sin tax on energy drinks, cigarettes and alcohol.
2 min read
09 June, 2019
Oman is pushing for more tourists to visit the sultanate [Oman Tourism]
Oman will institute a new tax on sugary drinks and tobacco starting on June 15, Reuters reported.

The new "sin tax" aims to combat obesity and bring in more cash for the treasury of the small Gulf oil producer, which has been struggling after years of low oil prices.

Prices of goods will increase by 100 percent for tobacco products, energy drinks, alcohol and pork meat. Carbonated drinks will see an increase of 50 percent.

"The excise tax is a consumption tax and is considered to be indirect taxes. Thus, the final charge is on the consumers, but it is collected in advance at a stage of the supply chain, notably through the business sectors," said Sulaiman bin Salim al-A'adi, director general of survey and tax agreements.

Slow at implementing fiscal reforms, Oman has had to rely on external funding through bonds and loans. A 5 percent value-added tax planned for 2018 is now expected to be implemented by the sulanate in 2020, according to Reuters.

Oman followed similar sin tax increases in other Gulf states when the royal decree passed in March.

Oman's Government Communication Centre argued that the tax increases on cigarettes and alcohol will help combat health risks associated with the vices.

"Selective taxation seeks to achieve a set of objectives, the most important of which is the promotion of healthy lifestyles, the treatment of negative phenomena... and an additional resource for public finances through the possibility of the tax revenues collected to promote health and social services," is said in a statement.

Oman is already a relatively expensive destination for alcohol, with the average price of a beer around $8.60 a pint, mostly available at licensed hotels.

The country is making a big push to increase tourism, as it attempts to diversify its economy away with oil and gas.

It predicts the number of tourists coming to the country will increase by around five percent annually until 2023.

The price increases comes as part of a GCC initiative to raise taxes for harmful goods across the Gulf bloc.

The price of alcohol and cigarettes doubled in Qatar at the start of the year, while the UAE made a similar announcement in 2017.

Agencies contributed to this report.

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