Govts should carefully consider raising taxes on tobacco: BAT

01 Jun 2014 12:10pm
WINDHOEK, 01 JUN (NAMPA) – British American Tobacco (BAT) has called on governments across southern Africa to carefully consider the unintended consequences of increased taxes on tobacco products with the intention of reducing tobacco consumption.
The company’s response came after the World Health Organisation (WHO) called on countries to raise taxes on tobacco on World No Tobacco Day which was observed on Saturday. The WHO said this would encourage users to stop smoking and prevent other people from becoming addicted to tobacco.
The WHO and its partners mark World No Tobacco Day every year on 31 May, highlighting the health risks associated with tobacco use and advocating for effective policies to reduce tobacco consumption.
In a media statement issued on Saturday, BAT noted that it has observed a dramatic increase in the incidence of illicit trade in countries with higher excise rates on tobacco products, many of whom are struggling to curb the problem despite concerted efforts from law enforcement authorities.
The company said it does not believe that an increase in taxes on tobacco products will result in decreased consumption and instead, smokers may continue to look for cheaper, often illicit products.
“What’s more is that the call for increased taxation on tobacco products is being made from within a context of already high tobacco taxes across southern Africa, and an economic environment in which the disposable income of consumer’s remains stretched,” it noted.
Research indicates that up to 660 billion cigarettes a year are illegal – smuggled, counterfeit or tax-evaded in other ways. That is up to 12 per cent of world consumption. Closer to home, illicit cigarettes are already widely available throughout both formal and informal retail channels across southern Africa. In some countries, such as South Africa, the illicit cigarette incidence is nearly three times the global average, which is alarming, according to BAT.
However, WHO Director-General Dr Margaret Chan was quoted as saying in a WHO media statement issued on Saturday that increasing taxes on tobacco is the best way to reduce use and save lives.
“Raising taxes on tobacco is the most effective way to reduce use and save lives. Determined action on tobacco tax policy hits the industry where it hurts,” said Chan.
Based on data issued in the year 2012, WHO estimated that by increasing tobacco taxes by 50 per cent, all countries would reduce the number of smokers by 49 million within the next three years and ultimately save 11 million lives.
WHO calculates that if all countries increased tobacco taxes by 50 per cent per pack, governments would earn an extra US.dollars 101 billion (about N.dollars 10 trillion) in global revenue.