Committee greenlights cigarette duty cut, less than two years after sharp hike

The Parliament’s Whole House Committee has voted in favor of the government’s proposal to cut the import duty on cigarettes by half, less than two years after it doubled taxes on tobacco products.

Back in 2024, President Dr. Mohamed Muizzu’s administration increased the import duty on cigarettes and beedi from MVR 3 to MVR 8 per stick, and the ad valorem tax from 50 percent to 100 percent.

But an amendment to the Import-Export Act, sponsored by Komandoo MP Mohamed Ibrahim, proposes reducing the import duty on cigarettes, beedi and heated tobacco products from MVR 8 to MVR 4, and the ad valorem tax from 100 percent to 30 percent.

The bill also proposes exempting import duty on products used to help quit smoking, such as nicotine gum and nicotine patches.

The bill was presented at the Parliament on June 22, and sent to the Whole House Committee for review on June 24.

The committee passed the bill with bipartisan support on Monday morning.

During the meeting, lawmakers from the main opposition Maldivian Democratic Party (MDP) proposed summoning officials from relevant state bodies and analyzing the impact the change would have on the state budget, before passing the bill.

Meanwhile, Addu Meedhoo MP Abdul Rahman, an independent, proposed increasing the duty on beedi by 40 percent, and reducing the duty on heated tobacco products by 20 percent.

Vaikaradhoo MP Hassan Ziyad (Fitte), a lawmaker from MDP, proposed charging the import duty on the products based on grams instead of per stick.

However, the lawmakers failed to present the motions in writing, prompting the presidency to call a vote on the whole bill, instead of the amendments.

The bill passed with the unanimous vote of 69.

The 2024 decision to double the import duty on cigarettes had been part of sweeping changes by President Muizzu’s administration to crack down on smoking, which also saw the introduction of a ban on vapes and e-cigarettes, and a smoking ban on the post-2007 generation.

The anti-smoking measures earned Maldives global recognition, with a World No-Tobacco Day Special Recognition Award from the World Health Organization (WHO) for President Muizzu, and an Integrity Award from the Global Center for Good Governance in Tobacco Control (GGTC) for the Maldives.

Despite the global recognition for the measures, the ban on vapes and the subsequent doubling of import duty on cigarettes created an illegal market where vapes and cheaper brands of cigarettes are being smuggled in and sold in the Maldives. This has also resulted in the loss of millions of Rufiyaa in import revenue.

President Muizzu’s administration had continued to defend the tax hike, stating that public health far outweighed any financial loss.

But during a press briefing on May 31, Homeland Security Minister Ali Ihusan said the 2024 decision to double taxes on cigarettes had been a “difficult” one, and that the administration was considering lowering the import duty to MVR 4 per stick – something which he said was recommended by the World Health Organization (WHO).

The WHO has not made any official comment regarding the claim.

When questioned about the decision during a press briefing on June 1, President Muizzu insisted he wasn’t taking a U-turn on his strict stance on tobacco products, but was making “necessary changes”