File Photo: Packs of Marlboro cigarettes are displayed for sale at a convenience store in Somerville, Massachusetts (Photo: Reuters)
Egypt's main cigarette producer Eastern Company said on Wednesday that it will not raise the price of cigarettes until President Abdel-Fattah El-Sisi ratifies a new bill raising the Value-Added Tax (VAT) on cigarettes and other tobacco products.
On Tuesday, Egypt's parliament voted in favour of new amendments to the VAT law as part of broader economic reforms aimed at narrowing the nation's gaping budget deficit.
The new amendments, which will see cigarette pack prices increase by EGP 3.5 and EGP 5.5, are pending ratification by the president.
"Once the law is approved by the president and the company receives official notification about it, the hikes will immediately be put into effect," Morsi Abu Alam, who heads the company's press department, told Ahram Online on Wednesday. He did not say when the company expects this to happen.
The company sent a letter to the Egyptian Exchange (EGX) on Wednesday saying it has not yet been officially notified about "any decisions of price hikes."
The government said the new hike in cigarette tax will boost social protection spending, including on the country's national health insurance system.
Minister of Finance Amr El-Garhy said on Tuesday that the new tax hike is expected to generate between EGP 7-8 billion in revenues.
In July, Eastern Company, which supplies 70 percent of the Egyptian cigarette market, raised the price of some of its cheap Cleopatra cigarette products by between 4.2 and 17.6 percent due to increasing production costs.
The Egyptian pound has lost about half of its value since Egypt floated its currency late last year, which has resulted in increased prices for many products.