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Costs

Smoking costs China $57 billion in 2014: WHO calls for national ban

The economic dividends from China’s tobacco industry are a false economy, which is at odds with government’s vision for China’s future, the World Health Organization (WHO) claimed on Friday.

http://www.ecns.cn/2017/04-16/253586.shtml

“The total economic cost of tobacco use in China in 2014 amounted to a staggering 350 billion yuan ($57 billion), a tenfold increase since 2000,” Bernhard Schwartlander, the WHO representative in China, told a press conference in Beijing.

The increase is a result of more people diagnosed with tobacco-related illness and increasing healthcare expenditure, according to a report jointly released by the WHO and the United Nations Development Program (UNDP) at the conference.

“The direct cost of treating tobacco-related diseases in China was about 53 billion yuan and the indirect cost was expected to be 297 billion yuan,” in which the productivity loss from premature deaths was a major concern, according to the report.

Meanwhile, the report said that tobacco represents an economy of the past as China’s tobacco companies do not fit the vision of an innovative, value-added future economy.

“Projected increases in these costs will lead to negative spillovers effects across many sectors, placing increasing challenges to Chinese economy and businesses, in addition to the social welfare and health system,” it said.

Wu Yiqun, deputy director of the Beijing-based Research Center for Health Development, a think tank, told the Global Times earlier that China has huge public support for a nationwide smoking ban, but the timetable to adopt a law has been on the back burner.

“The proposed law has been mainly stymied by tobacco industry officials due to the huge economic interests involved,” Wu said.

The sector handed over 1.1 trillion yuan ($170 billion) to the State in 2015, up 20.2 percent from the previous year, the State Tobacco Monopoly Administration said in 2016.

The revenue from the tobacco industry derives from corporations whose business model is to create dependence on a lethal substance.

China in 2016 adopted the “Healthy China 2030″ blueprint, which says China aims to reduce smoking rates among adults from 28 percent to 20 percent by 2030.

More than 1 million people die of tobacco-related diseases every year in China, and the number is expected to reach 3 million by 2050 if no action to reduce smoking rates is taken. About 44 percent of the world’s cigarettes were consumed in China in 2014, nearly 26 percent higher than that in India, the report said.

China’s Ministry of Finance announced in May 2015 to raise cigarette taxation from the previous 5 percent to 11 percent, which “led to a reduction in cigarette sales for the first time in 20 years,” according to the report.

However, “cigarettes are increasingly affordable as the increase in cigarette prices has been much lower than the average increase in salaries.”

Tobacco Control Program

Context

Tobacco use, and its negative health, social and economic impacts, is a significant global health challenge.

http://www.worldbank.org/en/topic/health/brief/tobacco

According to the 2015 World Health Organization (WHO) Report on the Global Tobacco Epidemic, in 2013, 21% of adults globally were current smokers – 950 million men and 177 million women. Despite increasing global population between 2007 and 2013, smoking prevalence has actually declined worldwide from 23% in 2007, preventing an increase in the number of smokers in the world. The total remains at 1.1 billion smokers globally in 2013.

Tobacco use is a leading global disease risk factor and underlying cause of ill health, preventable death, and disability. It is estimated to kill more than 5 million people each year across the globe. If current trends persist, tobacco will kill more than 8 million people worldwide each year by 2030, with 80% of these premature deaths taking place in the developing world.

In 2015, the “Addis Ababa Action Agenda” adopted at the Third International Conference on Financing for Development held in Addis Ababa, Ethiopia — and later endorsed by the United Nations as part of the Sustainable Development Goals (SDGs) — recognized that public policies and mobilization, and effective use of domestic resources, underscored by the principle of national ownership, are central to the common pursuit of sustainable development, including achieving the SDGs.

Clause 32 of the Addis Ababa Action Agenda states that price and tax measures on tobacco are viewed as an effective and important means to reduce tobacco consumption and health care costs, and represent a revenue stream for financing for development in many countries.

The Action Agenda also stresses that the tobacco tax agenda is fully consistent with obligations acquired by 180 countries that are parties to the WHO Framework Convention on Tobacco Control (FCTC) (an additional seven countries have signed the FCTC but have not ratified it, and only nine countries are neither signatories or parties to the FCTC).

World Bank Group Tobacco Control Program

The World Bank Group’s Tobacco Control Program assists selected countries in fostering and implementing tobacco tax reforms to achieve public health goals by reducing tobacco affordability and consumption, and controlling illicit trade on tobacco. Work is currently underway or being initiated in the Philippines, Indonesia, Senegal, Colombia, Botswana, Ethiopia, Armenia, Georgia, Liberia, and Lesotho; work in Ghana concluded. Initial discussions are taking place Ukraine, Nigeria, Moldova, China, India, Peru, and Tajikistan. In addition, the program aims to support knowledge exchange, including peer-to-peer advice and support, among selected countries on the economics of tobacco control (for example, through the Joint Learning Network, which includes more than 30 countries). The preparation of a Tobacco Taxation Module as part of WBG/IMF Tax Policy Assessment Framework (TPAF) is underway as part of a new WBG/IMF initiative launched ahead of the Financing for Development Conference in Addis Ababa, held in July 2015, to help member countries strengthen their tax systems. One of the pillars of the initiative includes the development of “improved diagnostic tools to help member countries evaluate and strengthen their tax policies.” Building on their collective expertise, the Bretton Woods Institutions (BWIs) aim to play a fuller role in enabling all of their member countries to assess tax policy performance in order to identify priority tax policy reforms, and design the requisite support for their implementation. The TPAF is a diagnostic framework to provide systematic and structured assessment of a country’s tax policy system, and to develop options for improving such system given a set of policy objectives.

More specifically, the program assists government agencies in developing capacity to assess the health and social costs of tobacco use, and design, enact, administer and monitor tobacco taxation policies. Enhanced capacity will enable countries to increase prices and reduce tobacco use, taking into account the macro-economic and fiscal situation of each country, tax laws, and existing tax administration structure and processes. This process includes assessments and discussions related to fiscal revenues and allocation; smoking patterns and taxes at country level; and socio-economic and health impacts of increasing tobacco tax rates, under different tax policy scenarios, and including impacts on employment, smuggling and other likely impacts of tobacco tax reforms.

The Bank team engaged in this program is multi-sectoral, and includes experts in health, governance, and macro-economics and financial management. Initial discussions are being held to mobilize knowledge and expertise from the International Monetary Fund’s Fiscal Affairs team. The Bank team is also working closely with other international partners, such as the World Health Organization and the Campaign for Tobacco-Free Kids.

The Bank’s Tobacco Control Program is implemented through a multi-donor trust fund financed by the Bill & Melinda Gates Foundation and the Bloomberg Philanthropies. These donors take part in governance of the trust fund and participate in the selection of priority countries included for support under the program.

Joint Learning Network Module: The Joint Learning Network (JLN), connects practitioners and policymakers across countries, facilitating peer-to-peer learning and sharing of knowledge and experience. As part of the Bank’s program, the network is currently developing a Tobacco Tax and Illicit Trade on Tobacco Module targeting member countries in Asia, Africa, Latin American and the Caribbean, and Europe, as well as a diverse group of international, regional, and local partners. The module is expected to focus on tobacco taxation, tax administration, and illicit trade control measures.

In 1991 the World Bank adopted a mandatory operational policy not to lend, invest in, or guarantee investments or loans for tobacco production, processing, or marketing. The Bank’s activities in the health sector discourage the use of tobacco products.

Why the emphasis on tobacco taxation?

Raising taxes on tobacco products is one of the most cost-effective measures to reduce consumption of products that increase mortality , while also generating substantial domestic revenue for health and other essential programs—investments that benefit the entire population. Given this, the World Bank Group Tobacco Control Program gives priority attention to tobacco taxation.

Findings in the 2015 WHO Report on the Global Tobacco Epidemic show that while only 33 countries impose taxes that constitute more than 75% of the retail price of a pack of cigarettes—the taxation level recommended to have an impact on consumption —most countries that do tax tobacco products have extremely low tax rates. And some countries do not have a special tax on tobacco products at all.

Given this situation, the World Bank Group’s program supports governments to look at accumulated country evidence and use tax measures to increase the retail price of tobacco products as one of the best available public health policy measures.

Some important lessons from international experience about how to effectively implement tobacco taxation policy to achieve public health objectives can be adopted and adapted in policy dialogue and operational support to countries. Such lessons include:

While nearly all countries tax tobacco products, an excise tax is the most important type of tobacco tax, since it applies uniquely to tobacco products and raises prices relative to prices for other goods and services.

Simpler tobacco tax structures are more effective than complex ones, since tiered tax structures are difficult to administer and can undermine the health and revenue impacts of tobacco excise taxes.

Use of specific excise taxes enhances the impact of tobacco taxation on public health by reducing price gaps between premium and lower-priced alternatives, which limits opportunities for users to switch to less-expensive brands in response to tax increases. Taxing all tobacco products comparably reduces incentives for substitution.

Ad valorem taxes are difficult to implement and weaken tax policy impact. Since they are levied as a percentage of price, companies have greater opportunities to avoid higher taxes and preserve or grow the size of their market by manufacturing and selling lower-priced brands. This also makes government tax revenues more dependent on industry pricing strategies and increases the uncertainty of the tobacco tax revenue stream.

Specific excise taxes need to be adjusted for inflation to remain effective.

Tax increases should reduce the affordability of tobacco products. In many countries, where incomes and purchasing power are growing rapidly, large price increases are required to offset growth in real incomes.

Strong tax administration is critical to minimize tax avoidance and tax evasion, to ensure that tobacco tax increases lead to higher tobacco product prices and tax revenues, as well as reductions in tobacco use and its negative health consequences.

Regional agreements on tobacco taxation can be effective in reducing cross-border tax and price differentials and in minimizing opportunities for individual tax avoidance and larger scale illicit trade.

For more information, please contact:

Patricio V. Marquez

Lead Public Health Specialist

World Bank Group Health, Population and Nutrition Global Practice

Email address: pmarquez@worldbank.org

Blanca Moreno-Dodson

Lead Economist

World Bank Group Macro Economics and Fiscal Management Global Practice

bmorenododson@worldbank.org

Fewer Scots are choosing to smoke – but the costs of the habit remain high

National No Smoking Day passed last week with the now routine announcements from health chiefs welcoming the fact that fewer adults are choosing to light up.

http://www.scotsman.com/news/health/fewer-scots-are-choosing-to-smoke-but-the-costs-of-the-habit-remain-high-1-4392433

But the costs of the habit remain high and ensure that neither the Westminster or Holyrood governments will be declaring victory in their battle to stub it out.

Smoking remains the primary ­preventable cause of ill-health, disability and premature death in Scotland.

Each year tobacco use is associated with around 128,000 hospital admissions and more than 10,000 smoking-attributable deaths north of the border.

The average smoker in Scotland spends £1,500 each year on tobacco – and significantly more people in our poorest communities spend at this level compared to our most affluent.

Prevalence rates in Scotland have fallen from around 28 per cent in 2003 to just under 21 per cent in 2015. Among 13-year-olds and 15-year-olds, smoking rates have fallen steadily to their lowest ever levels – two per cent and seven per cent respectively.

“We’ve had ten years of decisive action which has undoubtedly improved our nation’s health – but there is still more to be done,” said public health minister Aileen Campbell. “As a result of our Take it Right Outside campaigns, reported exposure to second-hand smoke in the home among children under 16 has halved between 2013 and 2015 from over 11 per cent to six per cent.

“In December 2016 it became ­illegal to smoke in cars where children are present – and later this year, we will restrict the sale and availability of e-cigarettes to under-18s and introduce an offence for smoking near hospital buildings.

“We believe that by working together, and with the public’s ­support, we can achieve our goal of creating a tobacco-free generation by 2034.”

Data published this month by the Office for National Statistics (ONS) revealed that 17.2 per cent of adults across the UK smoked in 2015 – the lowest level since records began in 1974.

Figures from 2015 also showed the highest level of so-called quitters in more than four decades.

Smoking Costs Nearly 2% of World’s GDP, Tobacco Control Measures Needed

http://www.news18.com/news/business/smoking-costs-nearly-2-of-worlds-gdp-tobacco-control-measures-needed-1344166.html

Smoking consumes almost six per cent of the world’s total spend on healthcare and nearly two per cent of global GDP, a new research has found.

In 2012 the total cost amounted to $1,436 billion, with nearly 40 per cent of this sum borne by developing countries. The four BRIC countries — Brazil, Russia, India and China — accounted for 25 per cent of it, the findings showed.

“These findings highlight the urgent need for all countries to implement comprehensive tobacco control measures to address these economic costs,” the researchers said.

The detrimental impact of smoking on national health systems and economies has been widely studied since the 1960s, but most of these studies have focused exclusively on high income countries, the researchers noted.

So Mark Goodchild from World Health Organization (WHO) and colleagues wanted to include low and middle income countries to come up with more accurate estimates of the total global cost.

And so they included data from 152 countries representing 97 per cent of the world’s smokers.

They used the ‘cost of illness’ approach, first devised in 1960. This divides the economic impact of an illness into direct costs, such as hospital admissions and treatment, and indirect costs representing the value of productivity lost to death and disability in current and future years, for a given year.

The direct and indirect costs are then added up to provide the overall societal cost, usually expressed as a percentage of annual gross domestic product (GDP).

The researchers used data from sources such as the WHO and the World Bank to uncover information on the proportion of ill health and death attributable to smoking, national employment rates, and GDP for each of the 152 countries, to inform their calculations.

These showed that in 2012, diseases caused by smoking accounted for 12 per cent (2.1 million) of all deaths among working age adults aged 30-69, according to the study published in the journal Tobacco Control.

This figure included 1.4 million adults who would have been in the workforce.

The number of working years lost because of smoking related ill health added up to 26.8 million, 18 million of which were lost to death with the remainder lost to disability.

In terms of health spend attributable to smoking, this totalled $422 billion, equivalent to nearly six per cent of the global total.

The researchers pointed out that their calculations did not include the health and economic harms caused by second hand smoke or smokeless forms of tobacco, and that their estimates of lost productivity applied only to those who were economically active.

Bedford lost £14m last year due to smoking breaks

Figures released this week show smoking costs Bedford borough’s economy almost £34million a year.

But the biggest cost to the economy is not early deaths (£8.79million), smoking-related disease (£4.25million) or lost productivity because of sick days (£2.48million), says Action on Smoking and Health (ASH).

Instead the big cost is from people taking smoking breaks – reckoned to have cost Bedford firms nearly £14million last year because of lost productivity.

Councillor Louise Jackson, portfolio holder for public health, said: “Both councils and the NHS are experiencing severe funding pressures so these costs are not sustainable.

“Smoking remains the single largest cause of preventable death and illness in Bedford Borough, and the council provides free advice and support to help smokers to stop.

“People who use the stop smoking service are up to four times more likely to quit and last year we helped more than 700 people to successfully stop.

“For advice and support call 0800 013 0553.”

Deborah Arnott, chief executive of ASH, said: “We know that most local authorities remain committed to reducing smoking but key services are under threat from public health funding cuts.”

http://www.bedfordtoday.co.uk/news/bedford-lost-14m-last-year-due-to-smoking-breaks-1-7801719

Campaign Art: What’s the real cost of smoking?

People, Spaces, Deliberation bloggers present exceptional campaign art from all over the world. These examples are meant to inspire.

http://blogs.worldbank.org/publicsphere/campaign-art-what-s-real-cost-smoking

The real cost of smoking is high, especially high on your health. According to the World Health Organization (WHO), tobacco kills around 6 million people each year, out of which 600,000 are the results of non-smokers being exposed to second-hand smoke. The cost of smoking is also high on the global economy, as smoking burdens global health systems, hinders economic development, and deprives families of financial resources that could have been spent on education, food, shelter, or other needs.

Tobacco use is the world’s leading underlying cause of preventable death. It contributes to a great number of non-communicable diseases (NCDs), which account for 63% of all deaths. Prevention of tobacco use can significantly decrease the number of preventable deaths worldwide, encourage economic development, reduce poverty, encourage healthy lifestyle choices and support Sustainable Development Goals.

In order to prevent and reduce youth tobacco use, in February 2014 the U.S. Food and Drug Administration (FDA) put forward a national public education campaign titled “The Real Cost.” The following video is a part of this campaign:

It is no surprise that tobacco is made of extremely toxic materials. But did you know that “Tobacco smoke contains more than 7000 chemicals, of which at least 250 are known to be harmful and at least 69 are known to cause cancer?” Here are some of the chemicals contained in tobacco smoke:

campaign_art_-_1

What are the global actors doing about this issue?

Many of the international organizations, government agencies, civil society organizations, private sector, communities, and private citizens raising awareness about the negative effects of smoking, funding programs to decrease global tobacco use, and promoting smoke-free lifestyles. Many of them also agree that tobacco tax increases are the single most effective policy to reduce tobacco use. Tobacco tax increases reduce consumption and promote quitting, they are inexpensive to implement, and they are especially effective in reducing tobacco use by vulnerable populations. (Tobacco use is increasingly concentrated in populations with the lowest income and socioeconomic status, and explains a large proportion of socioeconomic disparities in health.)

In the fight against tobacco use, the World Bank Group (WBG) is making its mark. Fully aligned with the WBG’s twin goals of ending poverty by 2030, and boosting shared prosperity, global tobacco control has become a development priority for WBG. Since 1991 the WBG’s policy has been not to lend, invest in, or guarantee investments or loans for tobacco production, processing, or marketing. WBG’s Tobacco Control Program assists selected countries in fostering and implementing tobacco tax reforms to achieve public health goals by reducing tobacco affordability and consumption, and controlling illicit trade on tobacco.

Reducing Smoking Prevalence through Tobacco Taxation in Ukraine

Modeling the Long-Term Health and Cost Impacts of Reducing Smoking Prevalence through Tobacco Taxation in Ukraine

Download (PDF, 5.31MB)

Florida attorney general goes after 2 tobacco companies

CTA says:

Why has the insipid Hong Kong Govt not sued Big Tobacco for the massive costs of health care treatment caused by their tobacco consumer product which kills 2 in every 3 of its users ? http://bmcmedicine.biomedcentral.com/articles/10.1186/s12916-015-0281-z

Yet again in Legco on 17th January 2016 the tobacco company representatives tried their bully-boy tactics, threat to sue all and sundry etc, the same tactics which have already failed miserably in high court and subsequent legal appeals overseas, regarding plain packaging and Health Graphic warnings, claimed loss of tobacco trademarks and intellectual property rights caused by Govts changing the packaging of their ‘Silent Salesman’ advertising carton packaging.

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Florida Attorney General Pam Bondi on Wednesday sued two tobacco companies that she says are failing to pay millions owed to the state as part of a landmark settlement.

http://staugustine.com/2017-01-19/florida-attorney-general-goes-after-2-tobacco-companies

Bondi’s office, which filed the lawsuit in Palm Beach County, asserts that the state is already owed US$45 million and could lose $30 million a year going forward.

Nearly two decades ago, several of the nation’s largest tobacco companies negotiated a multibillion-dollar settlement with Florida to compensate the state for treating sick smokers. The state is projected to receive nearly US$356 million this current budget year in settlement payments.

The lawsuit contends that after R.J. Reynolds sold the cigarette brands of Winston, Kool and Salem to ITG Brands, both companies refused to make payments related to those brands. ITG Brands, the U.S. subsidiary of Imperial Tobacco, acquired the brands when Reynolds and Lorillard merged in 2015.

“The sale of major, pre-existing tobacco brands to another company for billions of dollars does not cause the payment obligations to vanish like a puff of smoke,” said Bondi in a statement. “I look forward to the state obtaining prompt relief.”

Florida filed its lawsuit a day after British American Tobacco announced that it is taking over Reynolds American in a US$49 billion deal.

Neither Reynolds nor ITG Brands responded to phone calls requesting comment.

Pushed by then-Gov. Lawton Chiles, Florida was one of the first states in the U.S. to seek damages from tobacco companies. The state’s lawsuit sought reimbursement for Medicaid costs in the past and future and contended that tobacco companies had engaged in unlawful actions and misleading advertising.

Smoking kills, so stop protecting it

http://www.nst.com.my/news/2017/01/204184/smoking-kills-so-stop-protecting-it

JAMES Bond isn’t the only one with a licence to kill. The World Health Organisation reports that smoking costs the global economy RM4.5 trillion a year, and will take eight million lives annually by 2030.

For a species that has invented fire, travelled to space and split the atom, we are still paying an industry to kill us. Mankind is indeed strange.

Decades of research have shown that smoking can be fatal. So, we are often asked: if cigarettes cause such harm, why are they allowed to exist?

One challenge is the separation of the problem — the health industry sees tobacco as a health issue, while businesses and governments see it as an economic driver.

But the same WHO report also states that the cost of smoking far outweighs the revenue from tobacco taxes.

Treating smoking-related diseases drives up the cost of healthcare. In 2005, Malaysia’s Health Ministry spent 26 per cent of its budget to treat those diseases, which accounted for 0.74 per cent of its gross domestic product.

There are also the environment, productivity and human development — smoking pollutes our air and water, and smokers are 30 per cent more likely to miss work (for longer periods, too). In some families, money for cigarettes is taken from household essentials.

No other industry causes as much damage to its users and non-users alike — and remains legal.

Instead of protecting this industry, we urge the nation to support tobacco control efforts in Malaysia.

Tobacco control can work. A study published in the United States this month reports that efforts since 1964 had resulted in eight million fewer smoking deaths.

We should want the same for our fellow Malaysians.

MANDY THOO

National Cancer Society Malaysia

Smoking Rates May Decline With Higher Tobacco Taxes

If all countries raise excise taxes on tobacco products, smoking rates may decline by up to 9%.

http://www.thecardiologyadvisor.com/prevention/smoking-rates-drop-tobacco-high-taxes/article/631011/

Smoking kills about 6 million people a year, and costs the world more than $1 trillion a year in health care expenses and lost productivity, but billions of dollars and millions of lives could be saved through higher tobacco prices and taxes, according to a report from the World Health Organization (WHO) and the US National Cancer Institute.

“The economic impact of tobacco on countries, and the general public, is huge, as this new report shows,” Oleg Chestnov, MD, PhD, the WHO’s assistant director-general for noncommunicable diseases and mental health, said in an agency news release. “The tobacco industry produces and markets products that kill millions of people prematurely, rob households of finances that could have been used for food and education, and impose immense health care costs on families, communities, and countries.”

Annual tax revenues from cigarettes globally could increase by 47%, or $140 billion, if all countries raised excise taxes by about 80 cents per pack, according to the report.

The report authors predicted this would raise cigarette retail prices an average of 42%, leading to a 9% decline in smoking rates and up to 66 million fewer adult smokers.

Poorer countries suffer the greatest burden from tobacco use. There are 1.1 billion smokers aged 15 years or older worldwide, and 8 out of 10 of them are in low- and middle-income countries.

The research summarized in this report “confirms that evidence-based tobacco control interventions make sense from an economic as well as a public health standpoint,” report co-editor Frank Chaloupka, PhD, professor of economics at the University of Illinois at Chicago, said in the news release.