4.2.87
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113.
All the duty proposals on imported tobacco come
into effect this afternoon 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.
(41)
(42)
1985 Budget Speech, paragraph 118.
1986 Budget Speech, paragraph 102.
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