Cigarette tax hike gets signoff from up top: The new VAT law on cigarettes, which adds EGP 0.50 to all tobacco products including heated tobacco products and liquid tobacco, was passed into law yesterday, according to a decision published in the Official Gazette. The tax is expected to raise some EGP 8 bn, according to House Planning and Budget Committee head Fakhri El Fiqi. MPs passed the draft amendment last week.

The official line is that the tax will somehow help stabilize the market.Retailers have been selling smokes far above the sticker price as supply has contracted. (Blame rising production costs and the FX crunch for poor supply.) The extra tax receipts will (somehow) help manufacturers shoulder the costs and increase production, the head of the Federation of Egyptian Industries’ tobacco division, Ibrahim Imbaby, said on Alaa Maso’uleety last night (watch, runtime: 10:40). We’re not entirely sure how that works — we’re looking into it and would love to hear from anyone with an explanation of how a new tax will help funnel cash into the coffers of manufacturers.

FX from Eastern Company’s new Emirati investor is also helping: State-owned tobacco manufacturer Eastern Company — which produces most of the country’s cigarettes, and which has felt pressure from the FX crunch and soaring inflation — received an injection of USD after selling a significant minority stake to an Emirati investor in September, which has also supported production costs, Imbaby said.

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