Up in smoke: cigar traders fear new tax rules could price them out of business
▶ Price of single cigars from Cuba and Costa Rica could increase to as much as Dh700
Cigar traders are bracing themselves for an uncertain financial future as a 100 per cent tax is imposed on tobacco products from October 1.
Luxury brands from Costa Rica and Cuba are likely to double in price, with the most expensive cigars set to cost more than Dh700 each.
Saudi Arabia introduced the same rate of tax in June.
While cigarettes will also double in price, they will remain affordable, and doctors have questioned if the price rise would be enough to deter longterm smokers.
Cigars, often sold as single products, could be more vulnerable to market forces as they are a more expensive form of tobacco use.
One UAE distributor of Cuban smokes said the cigar culture would diminish and could be killed off overnight.
“With a 100 per cent price increase on cigars, the UAE will become the most expensive country in the world to smoke them,” he said.
“The industry is not as established as in other countries so it would be hard to survive. Cigars should not be subject to the same tax as cigarettes as they are very different products.”
Marketed as a luxury product and a symbol of success and status, cigars go hand-in-hand with high-end whisky, although alcohol will escape that tax.
Top hotels in Dubai and Abu Dhabi have tapped into that culture by opening dedicated cigar bars to serve demand.
But the price rise in the UAE and across the GCC could result in a boom in trade at duty-free zones in airports around the world, the cigar trader said.
“There are a lot of assumptions being made and that has led to a lot of stockpiling of tobacco products,” he said. “People are buying cigars to fill up their humidors.
“In the UAE, hotels will take a 200 per cent margin on the resale price of cigars, while smoking centres will take a 40 per cent margin, so it is a difficult industry for us.
“Duty free is the area that will suddenly have the most focus. If cigars double in price, people will think twice.”
The cheapest cigars can cost Dh10, with more expensive brands such as the El Septimo cigar from Costa Rica one of the most costly at Dh350.
In hotel cigar bars, the price was even steeper before the new tobacco tax is applied.
At the Dukes Hotel Cigar and Whisky Lounge on The Palm, the cheapest cigars on offer are an Dh80 Hoyo De Monterrey Petit Robusto, followed by Dh90 for a Monte Cristo number 4.
The most expensive is a Dh235 Arturo Fuente Anejo Shark number 77. All are expected to double in price.
“We sell the cigars individually rather than in packets, so I’m not sure yet what the pricing structure will be with the new tax rules,” said Elizabeth Mburu, a cigar lounge waitress at Dukes Hotel.
“Most days we sell between one and three a day, but on weekends or during the holidays we sell more, maybe seven or eight in a day.
“Tourists want to try new things. They are luxury items so people will still want to spend the money. The price has not been a problem up to now, although they are expensive, but that could change.”
While occasional cigar smokers may be subject to less of the associated health problems of long-term cigarette smokers, they are still at risk from cancer-causing chemicals.
All tobacco smokers are vulnerable
to lung and heart disease, and oral cancers. A single full-size cigar can contain nearly as much nicotine as a pack of 20 cigarettes.
Even if the smoke is not inhaled, large amounts of nicotine can be absorbed through the mouth.
Second-hand smoke from cigars can also cause or contribute to lung cancer and heart disease, and increases the risk
and severity of childhood asthma, ear infections and upper and lower respiratory infections.
Noufal, a cigar salesman at Smokers Centre in the Mall of the Emirates, is expecting the tax to cost him business.
“Of course, we are concerned about how the new tax could affect our profits,” he said. “Some of our cigars are already expensive, so for them to double
in price could be a big problem for us.
“It is a luxury item but our most expensive individual cigars will be about Dh700 with the new added tax.
“There is a real concern we will lose a lot of business, and there is uncertainty about what will happen in future as occasional smokers may be priced out of the market altogether.”
Top-drawer brand cigars are luxuries, and retailers have no way of telling if demand will remain