A recent rumor about a Gulf Cooperation Council (GCC) tax on tobacco sent smokers scurrying for cigarettes before the ‘tax-free' stocks run out. This in turn led to an acute shortage of cigarettes in the market, with profiteers only adding fuel to the fire by holding back existing stocks for future sales. Over the past few days, cigarette prices have seen an increase of as much as 100 percent at retail outlets. Samir Alsheikh, a member of the brokers' committee at the Jeddah Chamber of Commerce, told Al-Riyadh Arabic paper, sister publication of Riyadh Daily, that there has been change in the tobacco tariffs. Based on his interactions with the Customs and other authorities, he said the proposed tax was not expected to come into effect before the end of the first quarter of this year. A sales official at one of the largest tobacco distributors in the Kingdom said supplies to the local markets were continuing uninterrupted, without any change in volumes. He alleged that some unscrupulous retail outlets were manipulating the market by hoarding stocks. "Though we are busy with annual stock-taking this time of the year, we have maintained the regular flow of supplies to the market," he said. He called upon the Consumer Protection Association to take action and penalize the stores that hoard cigarette stocks with an eye on profits. Meanwhile, revenues from customs duties imposed on tobacco are comparable to that on some non-oil sectors such as telecommunications, according to the actual and projected revenues by the end of 2016 in the Kingdom's budget.
