The New Year started off with many pondering about letting go off their expensive habits not only as part of their resolutions, treatment but also because of new changes in the law.
On New Year’s Day, about it the Tobacco Excise Tax left many of Palau’s tobacco users scratching their heads and wondering if they should continue chewing tobacco or smoking cigarettes.
The final Tobacco Excise Tax increase as mandated by law went into effect on New Year’s Day increasing the existing tax of $3.50 USD per 0.017 kilogram or per pack of cigarettes to $5.00 USD.
In September 2013, order the Tobacco Excise Tax was approved as a rider under the 2014 Fiscal Year budget law. The first increase of $3.50 USD was implemented following approval.
Prior to this new tax, the cost of a pack of cigarettes ranged from $2.95 to $3.50 USD depending on the brand. With the $3.50 USD tax increase, cigarette prices increased to about $4.40 to $5.50 USD.
In Koror, some mom and pop stores have increased their prices while others are still working on implementation.
In one of the local stores, the cheapest pack of cigarette found costs $5.85 USD. This is after implementing the new $5.00 USD tax.
The most expensive tobacco product and popular amongst the older generation is Redman. This smokeless tobacco product costs $23.50 USD. Only a few stores in Palau carry this product.
For the next two years, revenue from the excise tax including information on the volume of imported tobacco products will be compiled and stored. According to the law, the Bureau of Revenue, Customs, and Taxation in conjunction with the Finance Minister are required to submit a report to the President and both Houses of the Olbiil Era Kelulau (Palau’s Congress) by March 1, 2017.
This report will help assess future excise rates for both revenue and tobacco consumption.