The Knowledge Hub supports officials in Suriname on tobacco taxation

In August 2022, Corné made a presentation to the National Assembly of Suriname on tobacco taxation. He provided an overview of tobacco control policy, the role of tobacco taxation, and the issue of illicit trade. The presentation to the National Assembly was preceded by a technical discussion about tobacco taxation and illicit trade with officials from key government departments, including Health, Finance, Customs, the Economic Control Unit, and the revenue authority. Zunda, Senzo and Hana attended the technical meeting online.

Suriname has a uniform specific tax system. The excise tax on tobacco products in Suriname is set in US dollars, rather than in the local currency. Since 2011 the level of the excise tax has remained unchanged. In recent years the illicit trade in cigarettes in Suriname has become a significant problem. To address the illicit trade, the tobacco industry recommended that the government should introduce a tiered tax system, where the to-be-introduced lower tax tier would somehow bring the illicit cigarettes into the tax system. Earlier in 2022, officials from the Health Ministry asked the Knowledge Hub to comment on this proposal. We argued that this proposal was self-serving for the industry, would not solve the illicit trade problem, and would probably reduce government revenue. Illicit trade is primarily a criminal issue, not a tax issue. As a result of this intervention, the suggestion of a tiered tax system was shelved.

The fact of the matter remains that Suriname has an illicit trade problem. The industry estimates that it is as high as 80%. This is an exaggeration. Rough estimates by REEP suggest that it can be as high as 50%. In his presentation to the National Assembly, Corné indicated that the solution to the illicit trade problem lies in securing the supply chain, through the various mechanisms outlined in the Protocol to Eliminate Illicit Trade in Tobacco Products. These include a track and trace system, licencing protocols, and international cooperation. Based on the results of the Tobacco Excise Tax Simulation Model (TETSiM) using Suriname’s data, Corné showed that even in the presence of illicit trade, an increase in the excise tax would have positive fiscal and health consequences, although the illicit market does dampen the impact of a tax increase.