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Tobacco Taxation in Latin America and the Caribbean
By Guy José Bendaña-Guerrero & Asociados
The Organisation for Economic Co-operation and Development (OECD) has undertaken a project on tobacco taxation in the Latin America and the Caribbean (LAC) region. The project sought to identify ways of improving the effectiveness of tobacco taxation and stimulating dialogue on tobacco taxation policy between Finance and Health Ministries in the LAC region.
Over the past decades, countries in LAC have gradually, albeit partially, aligned their tobacco tax policy with best practices. Countries have started to rely more on excise taxes than on other indirect taxes to raise the price of tobacco products. Volume-based (i.e. specific) tobacco excise taxes are more common than price-based (i.e. ad valorem) tobacco excise taxes. Uniform rates are more widespread than tiered rates.
Many countries index their specific taxes to inflation, but none adjust them to real income growth. All traditional tobacco products (cigarettes, cigars, cigarillos and roll-your-own tobacco) are taxed, although not necessarily in the same way. Tobacco sale regulations are in place in most countries.
The report identifies key tobacco tax reform priorities across countries in LAC, including:
-Increase specific tobacco excise tax levels and index them to inflation and real income growth to reduce the affordability of tobacco products.
-In countries with an ad valorem tobacco tax component, introduce a minimum tax or price floor, and levy the ad valorem tax on the suggested or actual retail price rather than on the ex-factory price. Use information from the value added tax administration to ensure that the tobacco tax base
is aligned with the retail price.
-Align the design of excise taxes across tobacco products to achieve a similar tax burden, especially between highly substitutable tobacco products, to prevent smokers from switching from expensive to cheaper tobacco products rather than to reduce or quit smoking.
-Where the sales of new emerging tobacco and nicotine products are not banned, tax them at similar levels than cigarettes to reduce their take up, especially among young people.
-Account for the strategic response of tobacco businesses when designing tobacco tax policy. Evaluate the impact of tobacco tax increases on pre-tax and retail prices over time and follow-up with additional tax measures as necessary.
Guy José Bendaña-Guerrero & Asociados
GUY JOSE BENDAÑA GUERRERO & ASOCIADOS has a long and prosperous tradition in the field of intellectual property (IP) in Nicaragua, with roots that go back to more than 100 years, resulting on long-term relationships with renowned clients and attorneys worldwide.
The firm has its origins in the law firm Henry Caldera & Henry Caldera-Pallais, founded in 1907 by Mr. Henry Caldera. That same year of 1907, through the efforts of Mr. Caldera, Nicaragua had its first Trademark Law. In the late 1930’s, Mr. Caldera’s oldest son, Dr. Henry Caldera-Pallais, after studying law in Nicaragua, attended the University of Michigan, where he graduated as a Registered U.S. Patent Attorney. Dr. Caldera-Pallais in 1964 was a founding member of the Interamerican Association of Intellectual Property (ASIPI), the first regional intellectual property organization in the Americas. The firm continued to grow during the administration of Dr. Franklin Caldera, son of Dr. Caldera-Pallais, who obtained his doctoral degree in law from the Universidad Centroamericana in 1973.
Since 1985 the current partners, Dr. Guy José Bendaña Guerrero and Mrs. Blanca Aragón de Bendaña, took over the management of the firm. Dr. Bendaña Guerrero, Director of the firm, has distinguished himself as one of the most respected authorities in Central America in the field of intellectual property and law in general, being the author of several books such as “Course of Industrial Property Law”, “Study of the new Laws of Industrial Property” and “New Study of Contracts “, among others. Mrs. Aragón de Bendaña has served as the firm’s general manager and, thanks to her excellent management, the firm has been in constant growth, with a highly qualified staff committed to excellence. Since 1996, partner Julián José Bendaña Aragón joined the firm, and has been standing out as one of the most recognized attorneys in the field of intellectual property.
We have adapted to the constant change of the business world, supporting our clients in finding the most appropriate legal solutions for each moment. The firm distinguishes itself by understanding the needs of its clients, offering personalized service and adding value to its activities.
Nowadays we continue to be the leading firm in Nicaragua in the area of intellectual property, and at the same time, we have been consolidating other areas of service within the civil, commercial and labor fields, as well as litigation and consulting in general. The firm is well positioned to guarantee a pragmatic service that meets the requirements of the most demanding clients.