Category: Taxation

  • 2045 smoke-free target

    2045 smoke-free target

    Malaysia believes that it will be able to become smoke-free by 2045 through the implementation of anti-smoking initiatives and co-operation with other ASEAN countries, according to a story in The Sun Daily.

    The Sun quoted the Deputy Health Minister Datuk Seri Dr. Hilmi Yahaya as saying that strategies being drawn up included ‘intensifying health promotion efforts in a comprehensive manner’.

    “Cigarettes or tobacco are the biggest threat and main risk factor for non-communicable diseases, which contribute to more than half a million deaths in the ASEAN region each year,” Hilmi said.

    “That is why Malaysia together with other ASEAN countries wish to co-operate and share views towards creating smoke-free nations. I believe Malaysia will be able to reach the target by 2045.”

    Hilmi was speaking in George Town after opening the Regional Smoke-Free Cities Workshop and The Summit of Smoke-Free Leaders.

    He was joined by the South-East Asia Tobacco Control Alliance chairman, Dr. Siriwat Tiptaradol, and the Malaysian Health Promotion Board chairman, Tan Sri Dr. Mohd Nasir Mohd Ashraf.

    Hilmi said the Health Ministry aimed to reduce the number of smokers in Malaysia to 15 percent by 2025 and to less than five percent by 2045, in line with the target of becoming a smoke-free nation.

    The deputy minister said the government had undertaken various initiatives such as raising the excise duty on cigarettes and requiring graphic health warnings on cigarette packs.

    The government was making available free services at 944 quit-smoking clinics, through which 2,973 smokers, or 27.6 percent of the 10,791 smokers who had sought advice and counselling, had managed to quit smoking.

  • Tax deal edges closer

    Tax deal edges closer

    The government of the Philippines has said that it will accept an initial payment of about P3.5 billion toward the tax liabilities of local cigarette maker Mighty Corp, according to a story in The Manila Times.

    The Times story indicated, however, that the Department of Finance (DOF) had ‘stressed’ that such acceptance did not yet mean it was agreeing to the company’s total settlement offer of P25 billion.

    “We will accept the initial payment,” Finance Secretary Carlos Dominguez III said in a statement released on Thursday.

    The Finance department said it had been informed that a check for P3.44 billion would be issued by JT International Philippines (JTI).

    Last week JTI confirmed it was in talks with Mighty on the sale of the local cigarette maker’s manufacturing and distribution business and assets to Japan Tobacco.

    Mighty had earlier said that its tax settlement offer would be funded by means of an ‘interim loan’ from JTI and the sale by Mighty and its affiliates of its manufacturing and distribution business and assets, along with the intellectual property rights associated with these assets, ‘including those owned by the company, Wong Chu King Holdings Inc, and other affiliates, to JTI or any of its affiliates for a total purchase price of P45 billion exclusive of VAT’.

    The Finance department said Mighty would pay the balance of P21.5 billion on or after the closing of its proposed deal with JTI.

    Meanwhile, Dominguez said that even if the government accepted Mighty’s settlement offer, this would not preclude any criminal charges that the Bureau of Internal Revenue might file against the company in connection with its tax-related issues.

  • WHO report published

    WHO report published

    The recently-appointed director general of the World Health Organization, Dr Tedros Adhanom Ghebreyesus, has said that governments around the world “must waste no time in incorporating all the provisions of the WHO Framework Convention on Tobacco Control [FCTC] into their national tobacco control programs and policies”.

    “They must also clamp down on the illicit tobacco trade, which is exacerbating the global tobacco epidemic and its related health and socioeconomic consequences,” he said in a foreword to the latest WHO report on the global tobacco epidemic, which was published yesterday. “Forty Parties are needed for the Protocol to Eliminate Illicit Trade in Tobacco Products, under the WHO FCTC, to come into force. Currently, only a few more Parties are needed for this important step to occur.”

    The protocol, which was promoted by the WHO’s previous director general and which was adopted in November 2012, still has not entered into force. At its heart, it calls for the establishment of a tobacco-products tracking-and-tracing system, but a search for ‘tracking and tracing’ in the 135-page report brought up only one oblique reference, in a passage on tax stamps.

    In a press note issued alongside the report, which is said to have been ‘made possible by funding from Bloomberg Philanthropies’, the WHO said its latest report had found that more countries had implemented tobacco control policies, ranging from graphic pack warnings and advertising bans to no-smoking areas, though it wasn’t clear what was meant by ‘more’. ‘About 4.7 billion people – 63 percent of the world’s population – are covered by at least one comprehensive tobacco control measure, which has quadrupled since 2007 when only one billion people and 15 percent of the world’s population were covered,’ the press note said. ‘Strategies to implement such policies have saved millions of people from early death.

    ‘However, the tobacco industry continues to hamper government efforts to fully implement life- and cost-saving interventions…’.

    The press note went on to say that FCTC strategies to support the implementation of tobacco-demand reduction-measures, such as the “MPOWER” measures, had, during the past decade, saved millions of people from early death and hundreds of billions of dollars. ‘MPOWER,’ the note said, ‘was established in 2008 to promote government action on six tobacco control strategies in-line with the WHO FCTC to:

    • monitor tobacco use and prevention policies;
    • protect people from tobacco smoke;
    • offer help to quit tobacco use;
    • warn people about the dangers of tobacco;
    • enforce bans on tobacco advertising, promotion and sponsorship; [and]
    • raise taxes on tobacco.’

    The WHO press note is at: http://www.who.int/mediacentre/news/releases/2017/tobacco-report/en/.

    The report is at: http://apps.who.int/iris/bitstream/10665/255874/1/9789241512824-eng.pdf.

  • Illegal trade exposed

    Illegal trade exposed

    Philip Morris International has told the US Commission on Security and Co-operation that it has a ‘clear business imperative to combat the problem of the illegal tobacco trade’ and to ensure its products are sold legally in the market for which they are intended.

    According to a note posted on PMI’s website, Marc Firestone, the company’s senior vice president and general counsel yesterday appeared as an invited witness before the commission to offer expert testimony in support of the commission’s objective of addressing the security and economic threats posed by the illegal trade in tobacco.

    The commission is a bipartisan body of the US Congress with representation from the House of Representatives and Senate.

    Firestone is said to have told the commission that the global illegal tobacco trade annually deprived governments of US$40-50 billion in lost tax revenue, a figure greater than that of the illegal trade in oil, wildlife, timber, arts and antiquities, and conflict minerals combined. He added that “criminals are the only promoters of the global illegal tobacco trade”.

    “The revenues that governments and law-abiding manufacturers like PMI lose every year to the illicit trade in tobacco are huge,” Firestone said. “However, the threat posed to safety, security, and the rule of law in Europe, the United States and around the globe is where the interests of our company and the concerns of this commission most pointedly intersect.”

    Firestone was said to have emphasized the critical role co-operation between industry, law enforcement, and government authorities could play in tackling illicit tobacco, and outlined a series of concrete measures that these groups could take to further reduce the flow of illicit tobacco worldwide.

    With Firestone on the expert panel were Dr. Louise Shelley, founder and executive director of the Terrorism, Transnational Crime and Corruption Center at George Mason University, and Professor David Sweanor, an adjunct professor at the University of Ottawa and global tobacco control policy expert.

    Firestone’s testimony is at: https://www.pmi.com/docs/default-source/pmi_media-center/pmi-testimony_final_17-july-2017.pdf.

  • New end game in sight

    New end game in sight

    Due to the rapid take-up of alternative tobacco devices in Japan and South Korea, Philip Morris International is looking to begin talks with governments within five years on phasing out traditional cigarettes, according to a story by Jackie Horne for asia.nikkei.com.

    Horne said the time frame was based on projections of when the number of people using ‘new smoke-free devices’ would overtake the number of people smoking traditional cigarettes in those two countries.

    “If you extrapolate the figures, then logically we could reach the tipping point in five years,” CEO Andre Calantzopoulos reportedly told the Nikkei Asian Review in a recent interview in Seoul.

    “That is when we could start talking to governments about phasing out combustible cigarettes entirely.”

    ‘Calantzopoulos, who became chief executive in 2013, has staked his company’s future on next-generation devices it claims can reduce toxicity by as much as 90 percent,’ said Horne. ‘These include the IQOS device, which heats, rather than burns, tobacco packed into what resemble mini cigarettes.’

    Calantzopoulos was quoted as saying that Asia was extremely important to the company as it implemented its strategy of phasing out conventional cigarettes.

    The region was home to 60 percent of the world’s more than one billion smokers and Japan was the first and still the most successful market for IQOS.

    Consumer take-up in South Korea, where sales began on a limited basis in late May, had also been encouraging.

    Horne’s piece is at: http://asia.nikkei.com/Business/Companies/Japan-South-Korea-face-tipping-point-Philip-Morris-CEO?page=1.

  • Tobacco production secure

    Tobacco production secure

    Leaf tobacco production is not expected to dwindle despite the Philippines’ government’s introduction almost five years ago of the Sin Tax reforms that were intended in part to discourage smoking, according to a Business World Online story quoting a mayor from the Ilocos region, a key growing area.

    “Tobacco is considered a high-value crop,” Batac City Mayor Albert D. Chua was quoted as saying. “Farmers won’t walk away from it because it’s a cash crop.

    “There are suggestions to reduce the area planted to tobacco and shift to other crops; the problem is that farmers will always plant what is competitive,” he said.

    Data from the National Tobacco Administration, however, is said to show that the law might have been effective up to a point since tobacco production declined from 67.665 million kg in 2013 to 51.947 million kg in 2015.

    Republic Act No. 10351 raised excise taxes on ‘sin’ products such as cigarettes and alcohol in a bid to temper public demand for these products.

    It required that 15 percent of the additional revenue from the increased taxes should be earmarked to ‘programs that will provide inputs, training, and other support for tobacco farmers who shift to production of agricultural products other than tobacco including but not limited to spices, rice, corn, sugarcane, coconut, livestock and fisheries’.

    The Business World story said that, according to farmers interviewed separately, there was still strong demand for tobacco from cigarette manufacturers and distributors, as companies continued to offer them production contracts.

    But the picture seems to be mixed. “Tobacco won’t be abandoned by Ilocanos,” tobacco farmer Agnes Asuncion was quoted as saying. “We have long earned our living from tobacco,” added Asuncion, who nevertheless is a tobacco farmer who diversified into dragon fruit after the Sin Tax reform.

  • Tracking questions

    Tracking questions

    The Hungarian MEP Norbert Erdős has asked the EU Commission whether tobacco producers may continue to introduce their tobacco-products tracking and tracing systems.

    In a preamble to two questions, which are due to be answered by the Commission in writing, Erdős said that though the new Tobacco Products Directive (TPD) entered into force more than three years ago – on 18 May 2014 – the Directorate-General for Health and Food Safety (DG SANTE) planned to adopt, ‘experimentally and only by the end of this year, the delegated and implementing acts intended to bring into effect Article 15 on traceability and Article 16 on security features’.

    ‘This means that the Commission has spent more than three and a half years drafting the outline of the legislation regulating the introduction to the technical specifications, which leaves only 18 months for member states, the industry and distributors to carry out the work needed for them to comply with the legislation,’ he said.

    ‘The Commission has previously declared that member states need not wait for the delegated and implementing acts and that member states and industry operators may start the work needed for them to comply with the requirements specified in the TPD.’

    Erdős asked:

    1. ‘Does that mean that tobacco producers may continue the introduction of their tracking and tracing systems?’ and
    2. ‘Can the Commission confirm one of the conclusions of the Commission’s communication of 6 June 2013 (COM (2013) 324 final) that “the measures implemented by the four big manufacturers under the co-operation agreements, such as tracking and tracing of tobacco products, due diligence in relation to customers and prevention of money laundering, have clearly led to a significant reduction in the presence of these companies’ products on the illicit market”?’
  • France is smoking

    France is smoking

    The EU Commission has been asked whether it has any recommendations on how to reduce smoking in France where, apparently, despite strict anti-tobacco policies, smoking rates are high.

    The French MEP Mireille D’Ornano said in a preamble to two questions that the Commission is due to answer in writing that, according to a study conducted by the French National Public Health Agency, cigarette consumption was still particularly high in France.

    ‘In 2016, 34.5 percent of the population in the 15-75 age bracket smoked tobacco, 83 percent of whom did so daily, which is a much higher proportion than in neighbouring countries,’ she said. ‘In France, smoking is the direct cause of 73,000 deaths each year.

    ‘Yet, according to the British think-tank, the Institute of Economic Affairs, France has the third strictest anti-smoking policy in the EU. It appears that France has already implemented the recommendations made by the World Health Organization for the World No Tobacco Day on 31 May, particularly with regard to the pricing and taxation of tobacco products.’

    D’Ornano asked:

    1. ‘Does the Commission have any recommendations on how French anti-smoking policy can be made more effective?’ and
    2. ‘Does the Commission intend to take ambitious measures against cross-border tobacco tourism and the sale of smuggled cigarettes?’
  • Tobacco’s ‘dirty war’

    Tobacco’s ‘dirty war’

    British American Tobacco and other multinational tobacco firms have threatened governments in at least eight countries in Africa demanding they axe or dilute the kind of protections that have saved millions of lives in the west, according to a story by Sarah Boseley for The Guardian.

    The story, Threats, bullying, lawsuits: tobacco industry’s dirty war for the African market, is the first instalment in a series of reports that the UK-based newspaper is due to run under the heading, Tobacco: a deadly business.

    Boseley said that BAT was fighting through the courts to try to block the Kenyan and Ugandan governments’ attempts to bring in regulations to limit the harm caused by smoking.

    The company hoped to boost its markets in Africa, which had a fast-growing young and increasingly prosperous population.

    ‘In one undisclosed court document in Kenya, seen by the Guardian, BAT’s lawyers demand the country’s high court “quash in its entirety” a package of anti-smoking regulations and rails against what it calls a “capricious” tax plan, Boseley said. ‘The case is now before the supreme court after BAT Kenya lost in the high court and the appeal court. A ruling is expected as early as next month.

    ‘BAT in Uganda asserts in another document that the government’s Tobacco Control Act is “inconsistent with and in contravention of the constitution”.

    ‘The Guardian has also seen letters, including three by BAT, sent to the governments of Uganda, Namibia, Togo, Gabon, Democratic Republic of Congo, Ethiopia and Burkina Faso revealing the intimidatory tactics that tobacco companies are using, accusing governments of breaching their own laws and international trade agreements and warning of damage to the economy.

    ‘BAT denies it is opposed to all tobacco regulation, but says it reserves the right to ask the courts to intervene where it believes regulations may not comply with the law.’

    Meanwhile, The Guardian said that its series of tobacco reports was focused on the damage caused by the tobacco industry, which continued to endanger the lives of millions of the world’s most vulnerable people

    ‘This content is funded by support provided, in part, by Vital Strategies with funding by Bloomberg Philanthropies,’ the newspaper said. ‘Content is editorially independent and its purpose is to shine a light on both the tobacco industry and the world’s most vulnerable populations, who disproportionately bear the brunt of the global health crisis resulting from tobacco consumption.

    ‘Although tobacco consumption remains one of the world’s greatest health threats, media coverage has decreased as the sense of urgency to address the issue has waned. This investigative reporting series seeks to renew the focus on tobacco consumption and deaths worldwide, contextualised through the duel [sic] lenses of global inequality and health.

    ‘All our journalism follows GNM’s published editorial code. The Guardian is committed to open journalism, recognising that the best understanding of the world is achieved when we collaborate, share knowledge, encourage debate, welcome challenge and harness the expertise of specialists and their communities.

    Unless otherwise stated, all statements and materials posted on the website, including any statements regarding specific legislation, reflect the views of the individual contributors and not those of Vital Strategies and/or Bloomberg Philanthropies.’

    Boseley’s piece is at: https://www.theguardian.com/world/2017/jul/12/big-tobacco-dirty-war-africa-market.

  • Mighty tax story moves on

    Mighty tax story moves on

    In a note posted on its website this morning, Japan Tobacco Inc indicated that it had not announced the information contained in a recent news story concerning JT’s ‘acquisition of assets from [Philippines-based] Mighty Corporation’ (MC).

    It said it would make a further announcement ‘when appropriate’.

    Quoting information from the Philippines’ Department of Finance, Cliff Venzon, writing yesterday for Nikkei, said JT had offered to buy MC and related assets for 45 billion pesos ($890 million).

    ‘The country’s Bureau of Internal Revenue in May said Mighty owed 37.88 billion pesos in taxes,’ Venzon wrote…

    ‘In a July 10 letter to bureau chief Cesar Dulay, Mighty president Oscar Barrientos offered to pay 25 billion pesos as a compromise.

    ‘Barrientos said the settlement would be funded by an “interim loan” from JT International Philippines and from the sale of business and assets of Mighty affiliates to JTI, according to the finance department, which oversees the tax bureau.

    ‘A JT representative in Tokyo said the acquisition talks are ongoing, while officials from Mighty were not immediately available for comment.’

    Meanwhile, a story in The Philippine Star yesterday said MC had offered to settle its tax liabilities of P25 billion pesos through a loan and through proceeds of its sale to Japan Tobacco International Philippines.

    “We are studying the offer,” finance secretary Carlos Dominguez III,” was quoted as saying in a statement.

    Dominguez added that the settlement offer of the Bulacan-based manufacturer was separate from criminal charges the Bureau of Internal Revenue filed against the company.