Changes To Customs And Duty Rates Introduced

At a meeting of the Executive Council on Tuesday 21 March 2023, it was agreed that several changes to customs and duty rates would be introduced from 1 April 2023. These changes were considered by the Tax and Revenue Working Group before being proposed to the Executive Council. The working group includes representatives from the Legislative Council and the Chamber of Commerce.  

The Health and Social Care Portfolio has also been consulted about these changes and anticipate that, where applicable, they will contribute to reducing the health and social harms caused by alcohol and tobacco consumption on the Island. 

Increase in Imported Alcohol Duty

In relation to alcohol, Executive Council agreed duty on all imported alcohol will be increased by the current rate of inflation, which according to the most recent retail price index, is 5.7%. This is the same approach that has been applied in recent years, and means that the rate of duty on alcohol will stay effectively the same, once the effects of inflation have been considered. 

Under the Customs and Excise Ordinance 1999, import duty on alcohol is set at a specific rate per litre upon importation, not as a percentage of the retail price of the product, meaning that price increases faced by consumers will not be the same as the duty increase.

New Import Duty Category Rate for Beers and Ciders Between 4.5-6.0% abv

Beers and fermented beverages (such as ciders) are subject to duty according to what alcohol by volume (abv) duty band they fall within. There are currently three duty bands: up to 3% abv; 3% to 4.5% abv; and above 4.5% abv.

Executive Council has agreed that a new duty band be introduced from 1 April 2023 for beers and ciders with an abv of 4.5% to 6%. The duty rate for the new band will be set halfway between the rate for 3% to 4.5% abv and the highest rate of duty, which will now only apply to all beer and fermented beverages with an abv over 6%.

Feedback from importers, retailers and hospitality operators is that many people, and tourists in particular, have an expectation that certain well-known, higher-strength beers will be available on St Helena, but that the current duty arrangements mean that importers are discouraged from importing them. 

This change will support many hospitality and retail businesses to improve their offerings to both St Helenians and tourists. 

Tobacco Duty Increase

From 1 April 2023, duty on imported tobacco has increased by 6.7%. This level of increase is the current rate of inflation (5.7%) plus 1%, and is a continuation of the above inflation duty increases for tobacco applied in previous years. 

Smoking is not only addictive but is very damaging to an individual’s health, which in turn imposes costs on our whole community. 

Tobacco duty has increased substantially in recent years and the Island has seen a reduction in the number of people who smoke as a result, with almost 15% less people considering themselves to be a smoker in 2021 compared to 2016.  

International evidence shows that increasing the real price of tobacco is one of the most effective measures available to governments to discourage tobacco usage and reduce the associated harms. 

Review of Alcohol and Tobacco Taxation

SHG recognises that more work is required to fully assess the most appropriate taxation regime for both alcohol and tobacco in St Helena. It will therefore be undertaking a broad review in the next nine months to evaluate what impact the changes introduced this year have had on behaviours and patterns of consumption, and to establish whether any further policy changes might be appropriate ahead of the 2024-2025 financial year.

The review will investigate potential health and social impacts associated with harmful consumption patterns and assess what, if any, taxation interventions might be appropriate to help address these. This will be considered as part of wider work underway to develop a strategy aimed at helping to address substance misuse within the community.

Any recommendations resulting from this review will then be submitted to Executive Council for consideration.

Diesel Fuel Exemption

Currently, diesel imported or sold for the purposes of generating electricity by Connect, use in commercial fishing or the running the fish processing plant is exempt from import duty. These diesel fuel exemptions were first applied in 2019 and have been extended in each year since.

Executive Council has decided to extend these exemptions for 2023-24. 

In 2023-24, the Government will undertake a review to assess the impact of the current exemptions and inform a decision as to whether or not they should be continued in future years. Possible alternatives to the current system of ad hoc exemptions will be considered as part of that review. 

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