Category: Taxation

  • Suit over ‘cessation fee’

    Suit over ‘cessation fee’

    Oklahoma’s Attorney General Mike Hunter has said he will defend the state after two major tobacco companies and other interested parties filed a lawsuit challenging the constitutionality of a tobacco cessation fee, according to a story by Heide Brandes for the Red Dirt Report.

    Philip Morris USA and RJ Reynolds filed suit with the Oklahoma Supreme Court over a bill that was signed into law in May.

    Senate Bill 845 imposes a fee of $1.50 per pack of cigarettes, to be paid for by wholesalers.

    The fee is scheduled to go into effect in August.

    Lawmakers approved the fee as a revenue-raising measure to help fill Oklahoma’s nearly $900 million budget hole and as a way of reducing tobacco smoking.

    The fee is designed to help fund health initiatives in Oklahoma.

    The suit claims that the bill is not a cessation fee and is instead a strictly revenue-raising bill. According to the lawsuit, all revenue-raising bills must originate in the Oklahoma House of Representatives, be passed before the last five days of a session and be approved by a three-quarters supermajority of House members.

  • Income surcharge proposed

    Income surcharge proposed

    The government of Bangladesh is set to impose a 2.5 percent surcharge on the incomes of the manufacturers of tobacco products, including cigarettes, bidis, zarda and gul, according to a story in The New Nation.

    This was one of the proposals put forward when the Finance Minister AMA Muhith made his budget speech for the fiscal year 2017-18 on Thursday.

    In respect of packs of 10 low-segment cigarettes, Muhith proposed to increase the minimum price from Tk 23 to Tk27 and the supplementary duty rate from 50 percent to 52 percent.

    And in respect of packs of 10 ‘foreign-branded’ cigarettes he proposed setting the minimum price at Tk35 and the supplementary duty rate at 55 percent.

    However, the government is not increasing prices or supplementary duty rates for medium- and high-segment cigarettes that are currently sold at Tk45 and above.

    Muhith proposed to fix the tax-inclusive price of packs of 25 non-filter bidis at Tk15 and that of packs of 20 filter bidis at Tk15. The existing supplementary duty rates for non-filter and filter bidis will remain unchanged at 30 percent and 35 percent respectively.

    Cigarettes, bidis and other tobacco products were injurious to health, and the government and society incurred additional ‘medicare’ costs due to the consumption of these products, Muhith said.

    Therefore, high rates of duties were imposed on tobacco and tobacco production, and this year the government would impose a 25 percent export duty on these items with a view to discouraging their production and consumption, he added.

  • Spend more to save more

    Spend more to save more

    The US state of New Jersey is considering dedicating to anti-smoking initiatives one percent of the roughly $700 million it collects each year from cigarette taxes, according to a story by Michael Symons for WKXM-FM.

    New Jersey apparently spends $10 million a year on smoking programs, money that comes primarily from federal funds, whereas it used to spend $30 million on such programs. The Centers for Disease Control and Prevention recommends that the state should spend $103 million a year.

    That situation might change a little if a bill that sailed through the Senate budget committee on Thursday makes it into law. The bill would dedicate one percent or $7 million of the state’s annual cigarette-tax revenue to anti-smoking initiatives.

    It was a step in the right direction, said Karen Blumenfeld, executive director of Global Advisors on Smokefree Policy. “Well, $7 million is a lot better than what we have right now,” she said. “Whatever type of funding is available to help people not start and to help those who are exposed to second-hand smoke and to help people quit is invaluable.”

    Brian Shott of the American Cancer Society said the $7 million would eventually lead to 1,100 fewer premature smoking-related deaths and a nearly $68 million decrease in future health expenditures.

    “This bill is a critical first step in ensuring that tobacco users in New Jersey are equipped with the resources that they need to quit their addictions and that others never start,” Shott said.

  • Taxing harm reduction

    Taxing harm reduction

    Bangladesh’s budget for the upcoming fiscal year is expected to bring bad news for electronic cigarette users, according to a story in The Dhaka Tribune.

    The newspaper said the government was planning to raise duties on the import of these products and e-liquids.

    The Finance Minister A.M.A. Muhith is said to have proposed raising customs duties on both e-cigarettes and e-liquids to 25 percent from the existing 10 percent.

    He is said to have proposed also the imposition of a new 100 percent supplementary duty on these two items.

    According to the minister, the duty hike was being proposed because e-cigarettes, like bidis and cigarettes, were hazardous to health.

    “The use of e-cigarettes is increasing day by day as it has become very popular among the young smokers from comparatively wealthy families,” Muhith said in his budget speech on Thursday.

  • China’s slow ‘progress’

    China’s slow ‘progress’

    Despite signing a World Health Organization treaty on tobacco control more than a decade ago, China is experiencing one million deaths a year from smoking, according to a report published yesterday by the University of Waterloo’s International Tobacco Control Policy Evaluation Project (ITC) and China’s Center for Disease Control and Prevention (CDCP).

    The ITC-China CDCP report presents the results of a 10-year longitudinal study of 8,000 smokers and 2,000 non-smokers in five major Chinese cities and five rural areas. It found, in part, that more than half of the country’s 316 smokers had no intention of quitting.

    “The ITC survey shows clearly that although China has made some progress in tobacco control, their progress on combatting the number one cause of preventable death, cigarettes, has been slow,” said Geoffrey Fong, founder of the 28-country ITC Project and professor of psychology at the University of Waterloo. “For 10 years, China has not taken actions to reduce smoking that have been shown to work well in many other countries.”

    In addition to finding high rates of smoking and low quitting intentions, the study found also that though awareness of the harm caused by cigarettes to smokers had increased during the past decade, it was still the lowest of any country surveyed by the ITC Project.

    According to the survey, only 61 percent of Chinese smokers were aware that smoking could cause heart disease, the lowest level of awareness of any ITC country. The survey found too that second-hand smoke was present in 62 percent of workplaces and 73 percent of homes in China, the highest levels of 20 ITC countries.

    “Smoking is the most important cause of chronic, non-communicable diseases, which account for nearly 90 percent of deaths in China,” said Yuan Jiang, the director of the Tobacco Control Office of the Chinese CDCP. “It is critically important for China to implement a national smoke-free law, pictorial health warnings on cigarette packages, and a complete ban on all forms of tobacco advertising.”

    The report includes recommendations for strengthening tobacco control efforts, including a substantial increase in cigarette taxes. ITC data was said to show that cigarettes were more affordable in China than in any other ITC country.

    “It’s now time for policymakers in China to build on the steps it has taken and to move decisively to reverse the tobacco epidemic,” said Bernhard Schwartländer, the WHO representative in China. “Findings from the ITC-China CDC[P] report present a compelling case that more action needs to be taken in China in the interest of public health.”

    The ITC-China CDCP executive summary report is at: www.itcproject.org.

  • Tobacco, marijuana go head-to-head

    Tobacco, marijuana go head-to-head

    Canada’s federal Health Minister is said to have demonstrated a ‘disturbing degree of incoherence in her recent approach to regulating tobacco and marijuana’.

    Imperial Tobacco Canada yesterday called on the minister, Jane Philpott, to use the opportunity presented by World No Tobacco Day, to explain her approach.

    In a press note issued through PRNewswire, the company said that the minister had proposed ‘plain and standardized packaging’ for tobacco products, despite cigarette packages already having a 75 percent health warning and being hidden from public view at point of sale.

    At the same time, she had said that all that was required for marijuana was a restriction on packaging or labelling to ensure that product packaging was not appealing to young persons.

    “Public explanation is needed as both marijuana and tobacco are substances with known health risks,” said Eric Gagnon, Imperial’s head of corporate and external affairs. “This suggests that marijuana and tobacco should face a similar regulatory framework, but the minister appears to be headed in the opposite direction, giving far more leniency to the marijuana industry.”

    The press note said that the youth usage rate for marijuana was higher than that for tobacco. And the minister had acknowledged that Canadian youth had the highest rate of marijuana use in the world at a time when tobacco use and youth smoking were at an all-time low.

    “There is clear policy incoherence, which is even more apparent considering the minister claims the goal with both marijuana and tobacco legislation is to protect youth,” said Gagnon. “How can two legislative frameworks, for products that both carry known health risks, have the same stated goal yet vastly different approaches?”

    Imperial said that the federal government had gone to great lengths to claim its goal was to eliminate the black market for marijuana and had suggested that taxes on marijuana would be kept low to allow competition with the illegal market. Yet, governments across Canada had and continued to tax cigarettes to an extent that had contributed to the creation of an illegal trade that now accounted for more than 20 percent of the tobacco market.

    “If the Minister truly believes her policy approach to marijuana is effective, then surely it can be applied to tobacco,” said Gagnon. “Instead, parliament is about to have the spectacle of the minister arguing on one day that branding on tobacco packaging lures youth to smoking and should be banned, while on the next day suggesting that branding should be allowed for marijuana to help compete against black market [products].”

    Imperial said that today, World No Tobacco Day, provided an opportunity for the minister to demonstrate that she was serious about the health of Canadians.

    But focusing on excessive and ineffective measures that made it easier for illegal traffickers to counterfeit licit tobacco products was not the way to demonstrate that commitment.

    The minister and her department officials needed to acknowledge the importance of alternative products – such as heated tobacco or vaping products – by prioritizing the introduction of clear regulations on these products, and making them known and available to adult consumers, as soon as possible.

  • Retailers call for restraint

    Retailers call for restraint

    The Sri Lanka Tobacco Retailers’ Association has urged the government to act with restraint when taxing and regulating tobacco products, according to a story in The Daily News.

    Representatives of the association last week met the newly-appointed Finance Minister, Mangala Samaraweera, to highlight several issues facing tobacco traders.

    They said that the association’s membership of more than 100,000 had been adversely affected by the government’s tax hike on tobacco products in October.

    The tax hike had impacted livelihoods severely because it had affected sales of other products that were normally bought by tobacco consumers entering their shops.

    Many tobacco consumers had switched to illicit products so no longer entered their shops.

    The representatives asked the minister to maintain the prices of licit tobacco products at reasonable levels, not implement a proposed ban on single-stick sales, and not introduce regulations that would affect their business and livelihoods in a drastic manner.

    They said that tobacco traders had conducted their businesses in an ethical manner, respecting the laws and regulations applying to the tobacco trade.

  • Smokers work around TPD

    Smokers work around TPD

    According to the UK’s Tobacco Manufacturers’ Association (TMA), new research has shown that even before major changes to the UK tobacco market were due to come into full effect on May 20, people were increasing their purchases of cheap, black market tobacco products.

    ‘In a series of questions put to consumers over the last five months as the new measures were being phased in, the … TMA has tracked the impact of these regulations on smoker behaviour and found a growth in people buying from non-UK duty paid sources,’ the TMA said.

    The key findings of the TMA’s research were:

    • A 14.5 percent increase in smokers buying packs of 20 cigarettes from illicit sources and abroad during the past five months;
    • A 91.7 percent increase in smokers buying larger packs of hand-rolling tobacco from illicit sources and abroad;
    • A 31.6 percent increase in smokers buying online from social media and websites advertising cheap illicit tobacco;
    • A 22.1 percent increase in smokers buying any tobacco product from abroad, thereby avoiding UK duty.

    The survey found, too, that the average price paid for a pack of 20 cigarettes from an illicit supplier was £5.96 – £1.39 less than the £7.35 that the government has used to set the minimum excise tax on a pack of 20 cigarettes.

    “It is clear from this research that plain packaging and the small packs ban, measures imposed by Europe and adopted by the UK government, are already having an impact on smokers’ behaviour as they seek out cheaper alternatives from the black market and abroad,” said Giles Roca, director general of the TMA, commenting on the findings. “It’s no surprise that our research points to a rise in the illicit market – this is exactly what happened in Australia when plain packaging was introduced in 2012.

    “On banning small packs, which are particularly popular in the UK, independent research confirmed that such a move will cost the treasury £2.1 billion in the first year, costing 11,190 jobs whilst even those in public health agree that it will lead to people smoking more, not less, tobacco.

    “On plain packaging, a recent major independent review of 51 studies found no evidence that it acted to prevent youth-uptake – the chief justification why the measure was introduced in the UK. Whilst figures from France, that introduced plain packaging in January 2017, show cigarette consumption actually increased compared to last year when branding was allowed. In March alone the French bought four million packets of cigarettes, over four percent more than during the same period last year.

    “These measures were introduced [in the UK] not based on evidence or hard fact but on the dogma of various health lobby groups. Given these measures originated in Brussels, the government should commit to review each and every one of them following Brexit.”

  • Health funds unused

    Health funds unused

    A health development surcharge collected on all tobacco products in Bangladesh has remained unused, though nearly three years have passed since the government levied it, according to a story in The Daily Star.

    The government imposed a one percent surcharge on all domestic and imported tobacco products from fiscal 2014-15, with the proceeds to be used for ‘treatment and rehabilitation of tobacco disease-stricken people’.

    Since then, revenue officials have collected more than Tk6,000 million in surcharges, mainly from cigarette manufacturers, according to the National Board of Revenue.

    However, delays in framing the Health Development Surcharge Management Policy have held up the use of the funds.

    But there are signs of movement. Recently, the health and family welfare ministry prepared a final draft of the policy, which is due to be placed before the cabinet for approval.

    Preparation of the policy draft was said to have been held up because of delays in getting opinions and recommendations from all the stakeholders involved.

    And this delay has had consequences. “We could have used the money to control tobacco usage had we gotten the budget earlier,” a senior health ministry official was quoted as saying.

  • Calling for tax increase

    Calling for tax increase

    Indonesia’s Health Ministry is calling for tobacco tax increases on the grounds that cigarette consumption is a health hazard that causes trillions of rupiah in losses to the state, according to a story in The Jakarta Post quoting kompas.com.

    The ministry’s Research and Development Agency is said to have found that Indonesia suffers annual losses of Rp500 trillion (US$37.5 billion) from the negative impacts of smoking, an amount that represents a quarter of the state budget.

    “Smoking brings negative impacts, both directly and indirectly,” the agency’s chairman, Siswanto, was reported to have said on Tuesday.

    One direct impact was that many smokers suffered smoking-related illnesses and had to spend a lot of money on medical treatment: expenditure that become the responsibility of the Health Care and Social Security Agency.

    One indirect impact was caused when the heads of families died prematurely due to smoking, leaving their families in poverty. “When a husband dies at the age of 50, 20 years are lost,” Siswanto said. “If we multiply that with the minimum wage, it can reach Rp500 trillion.”

    Therefore, Siswanto said, his ministry was pushing for an increase in cigarette tax as part of efforts to reduce consumption.

    At the same time, the additional tax funds could help increase the budget for health care programs, he said.