Cigarette stocks withheld two weeks before budget

It was customary for cigarette distributors to be barred from purchasing cigarettes three days before a Budget speech was held, right before excise taxes could be increase on the retail price of cigarette packets.

But this year, wholesalers were barred from purchasing cigarettes a whole two weeks before the budget, set to be held on 4 November.

A cigarette distributor told MaltaToday that in previous years, Customs would limit the amount of cigarettes which can be purchased from importers on the Thursday before the Budget, normally held on a Monday.

However, this time around Customs barred distributors from purchasing cigarettes last week, a good two weeks before the 2014 Budget speech.

The wholesaler explained that normally, Customs would limit the purchase of cigarettes to a fraction of the regular quota, to impede any possible abuse.

With cigarette prices set to go up as part of government plans to raise indirect taxation by €24 million, it is believed that this pre-Budget 'clampdown' is to prevent retailers from hoarding on pre-budget cigarettes, and then sell them at the higher post-budget price.

But the effects have meant less cigarette packets on sale, and a decrease in brand variety.

"Last Thursday, I was told that I couldn't purchase cigarettes because I had exceeded my quota. Moreover, neither the distributors nor importers were informed of this," the distributor told MaltaToday, adding that he had not sold any cigarettes since then.

Distributors will only be allowed to make a small purchase on 1 November, equivalent to a one-day stock, however they will only resume normal business after the 4 November Budget speech.

"This means that I will be out of business for two weeks, barring the small amount of cigarettes I will purchase and sell on 1 November," the distributor said.

In total, 33 distributors operate in Malta and these wholesalers purchase cigarettes from four main importers. Importers pay the excise duty set stipulated by the government and the same companies set the price paid by distributors.

The distributor who spoke to MaltaToday added that wholesalers, of which some are represented by the GRTU, are demanding to be allowed to purchase cigarettes normally, according to the regular quota up to three days before the Budget.

Moreover, the distributor asked who was behind the decision to put forward the curb on purchases after claiming that finance ministry and Customs officials failed to provide a clear answer. He also asked whether the same measures were applied to alcohol wholesalers