BAT Calls for Reduction in Excise Duty

British American Tobacco (BAT), a cigarette manufacturing company in the country has called for the reduction in Excise Duty Rates, which it finds "very high", to curtail smuggling.

Speaking at the 49th Annual General Meeting of BAT, the Board Chairman, Dr. K. Kobina Richardson said because of continuous smuggling of cigarettes from neighbouring countries the company has lost substantial amounts in sales and loss of revenue to the government.

Dr. Richardson told shareholders that it is therefore encouraging that in this year's budget statement government announced its decision to wage war on smuggling including cigarettes at the point of sale.

"This commitment on the part of government is in the right direction and we will provide all the necessary support towards the achievement of the objective of minimizing the flow of smuggled cigarettes into the country."

The Board Chairman said the Excise Duty Rate currently stands at 140% of ex-factory price compared to between 15%-30% in the neighbouring countries and it is this large disparity which makes the business of smuggling very lucrative and attractive.

He said only a phased reduction in the relatively high Excise Duty Rate can offer a lasting solution to the problem. "We therefore take this opportunity to urge government to give the issue of harmonization of tax rates the necessary attention in our efforts to achieve full economic integration in the ECOWAS sub-region."

On the company's performance, he said gross sales increased by 56.9% the previous year to ?274.6 billion. Contribution to government revenue from Excise Duty and VAT amounted to ?150.8 billion representing a 59.8% increase on 2000. Operating profit of the company increased by 93% to ?32.7 billion due largely to improved volumes, cautious pricing policy and effective cost management.

He said Profit After Tax increased by 62.8% to ?24.5 billion whiles earnings per share increased by 58% on the previous year to ?343 in 2001. Based on the After Tax Profits the Board has proposed payment of a final dividend of ?145 per share amounting to ?10.0 billion.

He commended government for the stable economic situation in the country and added that the company expects to see further reduction in the rate of inflation, lower borrowing rates and relative stability of the local currency. He said because of the stable political situation in Sierra Leone now, BAT was able to resume shipment of cigarettes to that country, but on a small scale. The company is hopeful that continued improvement in the political and social conditions in Sierra Leone will enable BAT to vastly improve their export business in the coming years.