British American Tobacco Bemoans Increased Tobacco Taxes

On World No Tobacco Day, British American Tobacco (BAT) 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.

BAT says it does not believe that an increase in taxes on tobacco products will result in decreased consumption, 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 consumers remains stretched.

“Often, with an increase in taxes on tobacco products, a knee-jerk reaction by consumers under severe economic pressure is to unwittingly purchase cheaper cigarette brands in order to save money. Regrettably, these brands are often illicit brands that have a severe economic and social impact

We have observed a dramatic increase in the incidence of illicit trade in countries with higher excise rates on tobacco products, many of which are struggling to curb the problem despite concerted efforts from law enforcement authorities. Some research indicates that up to 660 billion cigarettes a year are illegal – smuggled, counterfeit or tax-evaded in other ways. That’s up to 12 percent 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,” read a statement from BAT.

BAT therefore urged governments seeking to reduce tobacco usage to broaden the scope of their considerations beyond increases in tax. “Public health objectives cannot be the sole aspect of consideration when determining fiscal policy. The unintended consequences as a result of increases in tax on tobacco products may, in fact, jeopardise the achievement of these public health objectives,” said BAT.

The WHO itself estimates that there are currently one billion smokers across the globe and that by 2050 this number could increase to 2.2 billion. Said BAT: “Given this estimation, we believe that it is going to be important for regulators to separate the issues around the sale of a legal, regulated but risky product and the unintended consequences that may arise from bad policy decisions. While we acknowledge the risks associated with smoking, we believe in a sensible approach to tobacco taxation that takes into account all the potential unintended consequences such as the illicit trade in tobacco products.”

Source : New Era