The UAE’s Federal Tax Authority has announced to levy 100 per cent tax on energy drinks and tobacco, 50 percent on carbonated beverages is going from the fourth quarter of this year. The main aim of implementing VAT and excise duties on consumer goods in UAE is to expand the government revenue. After the implementation of VAT in UAE, it plays an important role in accomplishing social objectives of the country and it goes beyond the perceived fiscal compulsions resulting from lower oil prices.
World Health Organisation (WHO) and the Tobacco Free Initiative has reported that 10 percent increase in the price of a cigarette could reduce the demand by 4 percent in high-income countries. In-low-and-middle-income countries, this price increases around 5 percent. The WHO report on the Global Tobacco Epidemic 2015 stated that, approximately six million people die every year due to tobacco-related diseases. It is also stated that around 25 to 30 percent adult population in UAE vaporise some kind of tobacco, which is hazardous to their health.
A Who report ‘Fiscal Policies for Diet and prevention of Non- Communicable diseases, it is assumed that high taxes on energy and sugary drinks might reduce the consumption, type 2 diabetes, obesity and tooth decay problems, it also reduces the burden of UAE’s health care system.
Indirect taxes and excise taxes are the important taxes in VAT. Excise taxes or duties on goods which are injurious to the health; policy measure should be taken by the government across the world to control consumption.