112.
I also propose to increase the duty rate on cigars from
$210 to $220 a kilogram, and that on manufactured tobacco (other
varieties) from $190 to $200 a kilogram. This will keep them in line respectively with those on imported manufactured cigarettes
and imported unmanufactured tobacco. Finally, I propose to
revalue the duty on Chinese prepared tobacco in line witn
inflation since 1985 when it was last revised, by increasing it
from $40 to $43 a kilogram. I estimate the additional revenue
yield from the two proposals to be $8 million in 1987-88.
113.
into
All the duty proposals on imported
imported tobacco come
effect this afternoon and
and should generate a total additional revenue yield of $55 million in 1987-88.
114.
In 1985, my predecessor mentioned the option of
imposing an ad valorem duty on tobacco (41). The trade was
subsequently consulted and their response was far from
unanimous (42). The existing duty structure with its consequent payment and drawback requirements is, however, less than ideal, particularly in relation to cigarettes. It is cumbersome and
costly to administer. It also imposes costs on local manufacturers, who have to tie up working capital in pre-paid
duty that can only be reclaimed on the export of finished
products. The differential in duty rates for imported and
locally manufactured products is open to charges of
protectionism although the present differential of around 10% is
fully within our rights and obligations under the General
Agreement on Tariffs and Trade.
115.
In the light of these factors it is my present
intention to move
in due course to a simpler duty structure in
which duties
duties would be levied on numbers of cigarettes rather than on weight of tobacco. This would entail the levying of
duty only on manufactured cigarettes
cigarettes destined for the local
(41)
1985 Budget Speech, paragraph 118.
(42) 1986 Budget Speech, paragraph 102.
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