Raising taxes to reduce tobacco use

Chhatra Karki, CNS Correspondent, Nepal                                 
Image credit: WHO
This year’s World No Tobacco Day was majorly centered on the mission of higher taxes on tobacco products to discourage tobacco consumption, especially among the youths. In various programmes organized on that day (May 31, 2014) in different countries all over the world, tobacco control experts emphasized on implementing the taxation policy as per the guideline of WHO. 

They delivered their opinion on tax hike to reduce tobacco use for lessening the adverse effects caused by tobacco on human health which will have a lasting positive impact on social, environmental and economic aspects.

The WHO has already urged the governments of concerned nations to increase the tax to 70% of the retail price of tobacco products because of which the WHO has expected a remarkable reduction in tobacco consumption. According to article 5.3 of the WHO Framework Convention on Tobacco Control (WHO FCTC), 177 nations who signed the FCTC should implement the guided tobacco price and tax in order to minimize its use. The FCTC, as the first world health convention, has emphasized on banning advertisements of tobacco, converting public areas and offices to ‘no tobacco zones’, conducting public awareness programmes regarding no tobacco and halting interventions of tobacco companies. Unfortunately, the government of Nepal has yet to implement its commitment to this cause, although Nepal had signed the FCTC in 2003.

The WHO has considered tax hike on tobacco as an effective tool to discourage use of tobacco products. According to the WHO, if the price of tobacco products rises by 10% due to tobacco taxes, the consumption of tobacco will reduce by up to 8% in most low and middle income countries. Increasing the taxes on tobacco will also increase government revenues significantly. A WHO study shows that USD 1.4 billion can be collected through a 50% price hike in tobacco products which can be utilized in the development works in the developing countries by increasing their budgets for food, education and health services in their region.

Despite the WHO guidelines of increasing tax upon tobacco products to at least 70% of their retail price, the government of Nepal has increased it to only 35% of retail price’. Under the WHO Framework Convention on Tobacco Control (WHO FCTC), Countries have set the goal of reducing tobacco consumption by 30% by 2025. Price Policies involving taxation have been a major instrument for tobacco control.  According to a Press statement released by WHO South-East Asia Region Office New Delhi, tax share in retail price of cigarettes have increased between 2009 to 2013 in countries such as Bangladesh from 67% to 71%, Maldives 30% to 40%, Nepal 25% to 35% and Sri Lanka 72% to 74%.

Dr Ehsan Latif,  Director (Tobacco Control), International Union Against Tuberculosis and Lung Disease (The Union) says, “Increasing taxes on tobacco products is the most effective policy measure a government can take to reduce tobacco-related mortality across a population. It is also seen as an attractive measure for governments, as it increases their revenues. The question we need to ask now is how are these new resources being used? Some countries, the Philippines, Thailand and Vietnam, for example, are using this extra income to fund tobacco control and to invest in other preventative health measures. Other low and middle income countries need to follow suit to create resources for tobacco control now, and also to create a tobacco control fund which is sustainable into the future.”

Jyoti Baniya, The president of Consumers Rights Protection Forum, Nepal, says that the flexibility in taxation of tobacco products may not be effective to keep people away from using it The Nepalese Finance Minister Dr. Ramsharan Mahat had informed in an event organized in Kathmandu that 90.15 million rupees are got annually as national revenue only from the transaction of tobacco products. He had said, “The tax hike on tobacco products, on one hand, reduces the number of users and on the other hand the reduces expenditure on health services due to decrease in number of patients in hospitals. So, the taxation on the tobacco products should be revised upwardly.''

Senior Physician Dr. Dhirgha Singa Bam also regards tax hike in tobacco products as a positive step in regard to the public health. He says, “Consumption of tobacco products falls as tax is increased on such products which will ultimately reduce the number of patients having respiratory complexities, asthma, bronchitis, allergy, TB, cancer etc. Research shows that the consumption of tobacco products in Nepal will reduce by 4% during the first year and gradually the diminishing rate will increase during consecutive years if the tax is hiked to 70% of retail price.”

According to WHO, tobacco is a risk factor for 6 of the 8 leading causes of death globally. Tobacco related diseases kill about 6 million people every year, which accounts for 1 in 10 of all deaths. More than 5 million of these deaths are the result of direct tobacco use while more than 600,000 are due to non-smokers being exposed to second-hand smoke. In South-East Asia, more than 1.3 million people die each year from tobacco related deaths.  A decrease in tobacco consumption that follows a higher tax and price will reduce future tobacco related deaths. "Research shows that higher taxes are especially effective in reducing tobacco use among lower income groups and in preventing young people from starting to use tobacco," Says Dr. Poonam Khetrapal singh, WHO Regional Director for South-East Asia.

Chhatra Karki, Citizen News Service - CNS
30 June 2014