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The UAE’s excise tax on carbonated drinks, tobacco and energy drinks, which will launch on October 1, has generated a mixed reaction from analysts and businesses involved.
The first tax on carbonated, or fizzy, drinks, will see prices rise by 50 per cent.
“I think we’ll see the sales of drinks decline dramatically,” said Colin Beaton, managing director of Limelight Creative Services, a retail strategy agency.
“Many of the consumers of soft drinks are in the lower income brackets, who will be hardest hit. Wealthier people will not mind going from Dh2 to Dh3. But people at the lower end of the economic spectrum will stop consuming these products,” he added.
Separately, a tax of 100 per cent will be placed on energy drinks, such as Red Bull, and tobacco products, effectively doubling their price.
Companies are concerned by steep hike in prices that consumers will be faced with on the morning of October 1.
British American Tobacco executives have complained about the lack of a phased-in approach, telling Gulf News that the overnight implementation of the tax will be harmful to their business.
“We are concerned that the sudden price increase will be damaging, and that the phased approach of countries implementing the tax at different times may incentivise smuggling,” said a spokesperson from British American Tobacco. (gulfnews)
