Tax punch hole in Bahrain sheesha biz

Manama : Sheesha (hookah) serving outlets in the Kingdom have been hit hard by the recent increase in tobacco products customs duty.

This comes after Customs Affairs announced last month that it would implement an increased tax on imported tobacco products (cigarettes and sheesha molasses) and alcoholic beverages by almost double.

The decision had a big impact on cigarette stocks in the country while it was still sold at the old prices, as consumers literally dried out the market. Similarly, the remaining old molasses stocks are also being gradually depleted and it’s the turn of sheesha smokers to feel the change.

Several molasses selling points in Al Khalifa Avenue in Central Manama, which is a hub for sheesha supplies, told DT News recently that suppliers have already implemented the new prices.

A few of the sellers said they refused to purchase new stocks with the increased prices. They said, “We’re the ones facing consumers and we can’t sell with such prices to our old customers. We’re now surviving on the old stocks. Even though some traders in other parts of the countries are selling at the new prices, we are telling our customers to go directly to suppliers and buy from them.”

DT News also approached some of the popular cafes and sheesha serving outlets in Bahrain. 

Veranda coffee shop manager Florentina Neculae confirmed that “the molasses suppliers’ new prices have affected the price margin but not in a way that would be considered unsustainable at the moment.”

She explained, “Before the tobacco price increase, we ordered an extra supply of it to avoid the gap in supply that would result in its unavailability. Since then, we’ve been studying the situation, but at the moment we cannot comment on the price increase as it will take time to formulate a stable price.”

On a positive side, Neculae said, with the increase in prices, people might get tended to opt for buying food rather paying for a luxury like smoking.

However, not every café feels the same about the increase in tax. Mambo Cafe owner Yousif Al Mutawa said, “We depend on the purchasing power of the citizens. Since most of our customers are Bahrainis, the increase has affected us badly.”

“And the increase in tobacco price, combined with the hike in rates of electricity, meat and vegetables, creates a big cycle of loss,” he added.

He also noted that the restaurant has witnessed a decrease in customers since people will have to cautiously decide on what to spend on - food or smoking. 

Talking more about the effects of the cycle of loss, he explained, “It’s becoming harder to pay salaries and rent on time nowadays.”

Al Mutawa also claimed that the suppliers are monopolising the market by controlling the prices and the shops are at their mercy.