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República Democrática de Timor-Leste�Ministério das Finanças��

PRO-HEALTH TAXATION

In Timor-Leste

 

 

 

 

Elson Martinho da Costa, National Director of Management of Effectiveness

And Mobilization of External Assistance, Ministry of Finance, Timor-Leste

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República Democrática de Timor-Leste�Ministério das Finanças��

I. Brief Introduction

 

 

 

 

 

 

    • Population is 1.34 million
    • Timor-Leste’s National Planning Document, the Strategic Development Plan (SDP 2030).
    • Timor-Leste’s economy is largely funded through a very well founded Petroleum Fund.
    • Fiscal strategy - Mobilizing domestic revenues and introducing new tax initiatives.

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República Democrática de Timor-Leste�Ministério das Finanças��

Products Harmful to Health

    • Timor-Leste has one of the highest smoking rates in the world
    • Almost 700 death per years 2012-2015
    • The WHO estimates that in 2020, about 35% of the population aged 15 years and above, were tobacco users
    • tobacco use is a major contributor to non-communicable diseases
    • WHO statistics, remain high in our country, with an incidence of 486 per 100,000 people.

 

 

 

 

 

 

II. Health Context

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República Democrática de Timor-Leste�Ministério das Finanças��

Pro-Health Taxation

    • Introduction of new tax initiatives in 2022 (sin tax for tobacco, sugar and sweetened beverages.
    • Intends to increase excise of those goods in order to increase the tax revenue.
    • Tax for tobacco product from USD 19 to USD 25 /kg, this is based on finding that has a potential impacts, would:
      1. Generate an extra USD 4 million total tax revenues (duty, excise, VAT) per year.
      2. Reduce smoking rate by 0.4% from 29.1% to 28.7%.
      3. Note: an excise rate of at least USD 30/kg in 2023 would be reduce total number of smokers
    • As well as introduced a new $1 per kilogram sugar tax and an introduction of a $3 per liter excise duty on sugary drinks.

 

 

 

 

 

 

III. Financing Strategy

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República Democrática de Timor-Leste�Ministério das Finanças��

  • Introducing new tax policy is in the political situation owing that coincided with the political situation (parliamentary election). Therefore, causing lack of consultation with all stakeholder.
  • Enforcement/implementation, did not widely conducting socialization to all stakeholders. Thus, when Ministry of finance presented to the National Parliament there were many pro and cons from opposition party.
  • Provoke inflation, an increase in the retail price of certain goods. In fact that the increase of tax not applicable for all goods, this is due to lack of information and provoked manipulation from suppliers.

 

 

 

 

 

 

IV. Challenges

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República Democrática de Timor-Leste�Ministério das Finanças��

V. Conclusion

 

 

 

 

 

 

  • These measures will be expanded in coming years.
  • Encouraging a healthier population,
  • Reducing the burden on our healthcare system, all while expanding our domestic revenue base to further invest in our people’s wellbeing.