JEDDAH – Retail traders have accused importers and wholesale suppliers of hoarding ahead of the imposition of new tariffs on tobacco products and beverages to make huge profits. However, importers said they have reduced distribution due to a shortage of supply and to take stock. The revised tariffs came into effect on Sunday. Ahmed Al-Zahir, a retailer in the Eastern Province, said importers started reducing supply a few months ago after learning about the tariff hike in order to make extra profit from existing stock. Some companies blamed the move on dearth of stock. "These companies have reduced or partially stopped supply after the General Authority of Zakat and Tax decided to impose selective taxes on tobacco products," Al-Zahir told Okaz/Saudi Gazette. However, he admitted that some importers reduced supply after their stocks dwindled. Ali Al-Ahmed, another trader, said some shops stocked cigarettes and beverages in their warehouses to sell them on the basis of the new tariff and make huge profits. Some American cigarettes are sold for SR105 per carton while others are sold for between SR58 and SR115 a carton. Distributors of beverages and energy drinks in Makkah stopped supplies in the past three days, saying they wanted to take stock of their warehouses. A warehouse official acknowledged that some companies stopped supply in the past two days not because of a lack of stock but because of their greed to benefit from the new tariff. Okaz/Saudi Gazette toured the Riyadh market and found many shop owners preparing to sell tobacco products and beverages at the new rates. "We'll all follow the same price as the authorities have warned violators would be fined SR10,000. The Ministry of Commerce and Investment has instructed us to stick to the new price," one trader said. The ministry has directed its branch offices across the country to check shops and markets to make sure they don't sell cigarettes and beverages at lower or higher prices. Shops in Madinah were not selling cigarettes in cartons due to a shortage of stock, informed sources said. At the same time, consumers wanted to purchase cigarettes and energy drinks in large quantities ahead of the price hike. The government decided to increase the tariff on tobacco products and energy drinks to discourage the public from consuming them and protect public health as the state spends large amounts of money to treat diseases caused by these products. The new tariff comes in line with the international agreements signed by the Kingdom to combat harmful products, World Health Organization's requirements and the GCC tax reform program. The Supreme Council of the Gulf Cooperation Council agreed to implement selective taxes on tobacco products, beverages and energy drinks at the end of 2016 after discussing the matter for more than 12 years. Every GCC member country has started implementing the new tax. Abdul Rahman Al-Hussain, spokesman for the Ministry of Commerce and Investment, said all branch offices have been instructed to monitor violations prior to the implementation of the new tax and punish violators in accordance with the law. "We monitored violations such as hoarding products, denial of sales, not giving bills or increasing prices before the prescribed date," he told Okaz/Saudi Gazette.
