NOV. 21 2013 (The Conway Bulletin) — Kazakhstan’s parliament passed a tax rise on alcohol and cigarettes which will balance prices with Russia and Belarus, its partners in the Customs Union, but could also anger ordinary people.
President Nursultan Nazarbayev voiced his approval for a law on so-called luxury goods in October during a party congress and also called for higher wealth taxes.
Besides higher taxes for large houses and powerful cars, the law specifically targets alcohol and cigarettes, which Mr Nazarbayev called “evil passions”.
The law will double the excise duties on strong alcoholic beverages in 2014, progressively reaching in 2016 a level of 1,600 tenge (about $10.50), more than three times the current value. On cigarettes, the increase will be 30% every year.
Russia has limited the amount of spirits that can be transported across the borders of the Customs Union in order to avoid price dumping. In Kazakhstan prices and excise taxes on alcohol and cigarettes had been lower than in Russia and Belarus. The new tax rises should change this.
Parliamentarians also justify the law because they said it would curb smoking and excessive drinking.
Other analysts, though, said increased prices could just push alcohol consumption underground and increase smuggling.
More tax increases for Kazakhstan’s wealthy are expected in the future. In the same speech in October that Mr Nazarbayev called for an increase in taxes on property, alcohol and cigarettes, he also called for a rise in income tax for the rich.
“Now when the wealthy class has expanded they can and should contribute towards social responsibility,” he said. “In our country a millionaire and a worker pay the same 10% income tax. We should think about it.”
Watch this space.
ENDS
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(News report from Issue No. 162, published on Nov. 27 2013)