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Fiscal cost of smoking far more than tax revenue from tobacco

MTI – Econews Wednesday 01:40, April 27th, 2011

The fiscal cost of smoking in Hungary is well over revenue from excise tax and VAT on tobacco sales, business daily Világgazdaság reported on Wednesday, a day after Parliament approved a ban on lighting up in most public places.

Budget costs related to smoking — both direct and indirect — came to HUF 379 billion-397 billion in 2004, Zsófia Pusztai, who heads the World Health Organisation office in Hungary, told the paper.

In the same year, budget revenue from excise tax and VAT on tobacco products reached just HUF 258 billion.

About 3 million of Hungary’s 10m population smoke. About 2,300 Hungarians die each year as a result of exposure to second-hand smoke, the paper said, citing scientific studies. Almost 28,000 Hungarian smokers die each year because of smoking-related illnesses.

The ban is likely to have little effect on Hungary’s catering industry, health economist József Bodrogi told the paper. In a recent study of 48 countries that introduced bans on smoking in public places, the only country in which turnover fell was Ireland, but there the ban came at the same time as a hike on the beer tax, he added.

Hungary’s tobacco industry, which employs almost 25,000 people, turns out more than 15 billion cigarettes a year, 11 billion fewer than ten years earlier.

Report: Smoking industry harming economic health

Last updated: January 7, 2011

Source: China Daily

download the report today from the above link

Cost of addiction rising as experts seek efforts to eradicate it

BEIJING – Lost productivity from smoking-related health problems will hamper China’s economic growth, and related costs incurred by smoking far exceed the tobacco industry’s contribution in terms of profits and jobs it generates, an international panel of experts warned on Thursday.

They also warned that China’s addiction to huge revenues from the State-owned tobacco monopoly is hindering anti-smoking measures, potentially costing millions of lives in the country with the world’s largest number of smokers.

The warnings, issued in a report prepared by a group of prominent public health experts and economists, came amid growing calls for the government to give stronger support to tobacco-control measures.

“As the health impact of smoking, including rising heart disease and lung cancer, gradually emerges, unless there is effective government intervention, it will affect China’s overall economic growth due to lost productivity,” said Yang Gonghuan, deputy director of the Chinese Center for Disease Control and Prevention.

She is also lead author of the report, Tobacco Control and the Future of China, which involved the efforts of 60 experts.

The report attempts to quantify the financial cost to China of smoking. Last year, it cost 61.8 billion yuan ($9.3 billion) more to treat people for smoking-related illnesses and deal with tobacco-related issues such as pollution, than the tobacco industry generated in profits and jobs created, Yang said.

Official data released last month said the tobacco industry made 65.9 billion yuan in profits in the first 11 months of last year, 6.3 percent higher than the previous year.

China is the world’s largest tobacco producing and consuming country, with more than 300 million smokers on the mainland, official statistics showed.

Each year, about 1.2 million people die from smoking-related diseases on the mainland and the figure will increase to 3.5 million by 2030, according to estimates from the World Health Organization (WHO).

The report underscores increasing concern that the country’s economic potential will be jeopardized due to escalating medical costs and lost productivity if the government fails to take serious action to combat smoking.

“The report comes at a crucial time in China’s battle against smoking,” said Xu Guihua, deputy director of the Chinese Association on Tobacco Control.

The report was released days ahead of a Sunday deadline that China will fail to meet as a member of WHO’s Framework Convention on Tobacco Control (FCTC). Measures to be taken before the deadline include banning smoking in public indoor venues as well as a total ban on tobacco-related advertising and sponsorship, Xu said.

The FCTC took effect in China on Jan 9, 2006 as a binding law after being ratified by the Standing Committee of the National People’s Congress. But a huge gap exists between China’s overall tobacco control and the FCTC’s requirements, the report said.

The number of smokers dropped by 0.45 percent annually between 2003 and 2010, compared to 0.9 percent between 1996 and 2002, it said.

Cigarette consumption has seen steady and robust growth, from 589.9 billion in 1978 to about 2.3 trillion in 2009, a year that saw China fail to meet an FCTC deadline on printing warning graphics instead of just slogans on packets of cigarettes.

Hu An’gang, director of Tsinghua University’s Center for China Studies, called the tobacco industry’s obstruction “the prime culprit” behind the failed anti-smoking efforts.

The report highlighted a conflict of interest concerning the State monopoly over the tobacco industry.

The State Tobacco Monopoly Administration is under the Ministry of Industry and Information Technology, the agency in charge of the government-initiated tobacco control campaign. This setup allows the tobacco industry to use the government’s authority to promote tobacco production and sales, impede adoption and implementation of tobacco control policies and laws, and publicly conduct activities undermining FCTC implementation, such as marketing tobacco brands in the name of charity, said the report.

Currently, the tobacco industry employs roughly 10 million people and generates more than 7.5 percent of total government revenues, official statistics showed.

“That undermines China’s fundamental goal for sustainable social and economic development as well as people’s basic right to health,” said Zhi Xiuyi, director of the Lung Cancer Treatment Center of Capital Medical University.

“Considering the long-term benefits, the Chinese government should work harder to prevent more deaths from smoking. It’s a major health and economic issue for the nation,” said Jeffrey Koplan, vice-president for global health at the Georgia-based Emory University in the US.

He also urged national legislation on smoking control in China.

The central government should establish a tobacco control bureau under the National Development and Reform Commission to lead China’s battle against tobacco, replacing the current Ministry of Industry and Information Technology, the report said.

Cigarette tax rise yet to have an impact

Last updated: January 4, 2011

Source: Times Age New Zealand

A 10 per cent tax slapped on cigarette and tobacco sales this week may prove an extra incentive for smokers wanting to kick the habit, with pack-a-day smokers now having to fork out over $6500 a year.

The rise is the second 10 per cent rise of three targeted hikes, with this week’s increase following one in April last year.

A further 10 per cent rise will take place on January 1 next year.

Renall St Store owner Michael Pickett said it was too early to tell if the price rise had had an effect on sales, as the new prices had only been going for a few days.

He said the cheapest 25-pack of cigarettes was now $15 (HK$92) for Freedoms, with the most expensive being Rothmans at $17.90 (HK$ 108) . A 20-pack went up NZ$2 overnight.

That meant someone smoking 10 cigarettes a day could now be looking at an annual cost of $2600, with pack-a-day smokers looking at over $6500 a year.

Mr Pickett said people were only just starting to notice the price hike.

“Some of them coming in are getting a fright, well all of them are getting a fright. But not all of them are planning on stopping.”

Most of the regular smokers were still coming in and buying their cigarettes, he said, but one young smoker had said that he was considering quitting soon.

Another Masterton retailer said he expected some customers to cut down or quit, but as many people were still away on holiday, it was difficult to gauge just how many.

National support group The Quit Group said the price hikes were proven to work, with the April tax increase leading to a huge uptake in New Zealanders trying to quit.

Their statistics indicated 4000 New Zealanders registered with Quitline in May 2010, double the number that signed up with them the previous May.

The Quit Group chief executive Paula Snowden said at the time that many smokers were looking for a way out of the habit.

“The majority of smokers wish they had never begun smoking and our survey shows that an increase in tobacco prices provides the trigger some smokers need to begin their quitting journey.”

Quitline has rostered on extra staff since New Year’s Day in an effort to deal with a current influx of callers.

Costs of tobacco

The cost of tobacco to Hong Kong through loss of productivity and medical treatment is HK$ 5.6 billion per year (HKU study). If the value of the loss of life were included the cost to HKG per year is HK$ 72 billion.

The tax collected on tobacco products is attached.

It is easy to see that HKG Government continues to subsidise the tobacco companies.

People should ask why.

Download the Revenue collected from Tobacco PDF here.

Unreported World; Ashes to Ashes

2ee0834824Last updated: May 15, 2010

Source: The Guardian

Jenny Kleeman’s investigation of child labour in the tobacco fields of Malawi is pretty bloody shocking

Jenny Kleeman is in Malawi for Unreported World (Channel 4), investigating child labour in the tobacco-growing industry. In terms of the numbers involved, it’s pretty bloody shocking. Thirty-five children from one primary-school class are absent, off working in the fields or sorting the tobacco leaves (you’d think that would be pretty much the whole class, but there are still around 70 in the room). Children as young as three work up to 12 hours a day, with just one break. One woman working full-time takes home just £18 a year for her family – the cost of three packs of cigs in Britain.

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It’s not nice work, either. They cough from inhaling the dust, and get poisoned by nicotine. Thousands of ordinary Malawians are trapped by the country’s reliance on tobacco.

Thank heaven, then, for Kleeman, ferreting about the place, being a proper journalist, exposing the bad guys. There’s not an enormous amount of light ahead. The tobacco companies keep the prices down, meaning less money for the farmers, and even less for the labourers. The politicians aren’t helping much, either. One was caught employing child labour on his own tobacco farm. The penalty is five years in jail or a £100 fine (that’s not a hard choice, is it?), but this guy got off with a warning. Maybe our lot, with their moats and duck islands, aren’t so bad after all.

Florida emerges as center of tobacco litigation universe

lawsuit-cash-advance-fundingLast updated: May 7, 2010

Source: St Petersburg Times

With 9,000 cases awaiting trial in Florida -including many appeals – the state has emerged as the prime battleground in the legal war against Big Tobacco.

On April 26, a Fort Lauderdale jury found Philip Morris USA, R.J. Reynolds Tobacco Co. and Liggett Group responsible for the cancer death of Margot Putney, a Florida woman who began smoking in about 1953 at the age of 15 and died in 1995. The verdict: $15 million.

On April 21, a Gainesville jury said R.J. Reynolds Tobacco was partially responsible in the death of Frank Townsend, who smoked cigarettes and later developed lung cancer. R.J. Reynolds’ portion of the verdict: $46.3 million.

And on April 14, a Pensacola jury found R.J. Reynolds and Liggett responsible for the wrongful death of longtime smoker Janie Mae Clay. The verdict: $21 million.

I could go on. And on.

The pace of tobacco litigation in Florida is fast and furious these days. And ever since tobacco industry defense attorneys scored two wins in this state in 2009, the verdicts – 13 in a row and counting – have turned against Big Tobacco.

This is no fluke. The recent string of favorable verdicts may spell big trouble for a cigarette industry that not so long ago used to brag that it never, ever lost a legal case brought by a dying smoker (or his or her family).

“This ever-growing list of plaintiff victories in Florida constitutes a trend with a capital T,” says Edward L. Sweda Jr., senior attorney for the Tobacco Products Liability Project of the Public Health Advocacy Institute at Boston’s Northeastern University School of Law.

Sweda’s tracked tobacco litigation since his days in law school in 1979. He argues the sheer momentum and volume of these Florida cases with unfavorable verdicts for tobacco will force the industry to settle. If they lose at the appeals level, he says, tobacco companies must actually start paying off the verdicts against them.

And that, argues Sweda, is when it becomes very possible the tobacco industry will start talking settlement.

Why? The drumbeat of rulings against Big Tobacco is remarkable enough. But what boggles the mind and checkbook is that those verdicts are only the first of an estimated 9,000-plus claims that state and federal courts in Florida are due to hear – in theory, at least – for decades to come.

So many lawsuits means the tobacco industry will be forced to put in its second- and third-string legal teams, Sweda suggests, which may result in more losses for Big Tobacco.

No other state boasts anything close to such a volume of upcoming tobacco litigation. For good reason.

A class-action suit was certified in Miami in 1994 claiming 700,000 smokers had been injured by cigarettes and a tobacco industry that did not warn people of smoking risks. An appeals court decided in 1996 that the class action could go forward, though only Florida smokers could be included. This memorable case became known as the “Engle” case for lead plaintiff and Miami pediatrician Howard Engle.

In 2000, the plaintiffs won $145 billion – that’s a b for billion – in what was the largest punitive damage award by a jury in U.S. history. An appeals court later overturned the verdict, and the Florida Supreme Court refused to reinstate it. But the Supreme Court left in place some critical legal changes in the tobacco wars.

First, the court permitted each of the Engle class’ members, known as the “Engle progeny,” to file lawsuits individually. Hence the 9,000-plus lawsuits awaiting their chance in Florida courts.

Second, the court said the Engle jury’s findings on cigarettes, their health effects and the companies’ conduct over the years had to be accepted in future tobacco cases.

That means smokers do not have to prove that cigarettes are harmful every single time they bring suit. It is already a given, the court stated, much to the tobacco industry’s dismay.

In federal cases, tobacco lawyers have appealed arguing these court instructions are unfair. They await a ruling on 4,400 federal cases, part of those 9,000-plus to be tried in Florida alone. But in Florida state courts, the state Supreme Court’s instructions are helping to generate verdicts at a breakneck pace.

What plaintiff lawyers have to prove in such cases is that the smoker (who may or may not be alive) was addicted and smoked a particular brand of cigarette.

In many cases, the verdicts are coming in with the juries assigning a percentage of responsibility to the smoker and the tobacco companies. Cigarette lawyers point to these split verdicts as evidence that these Florida cases are not clear-cut signs that the tobacco industry is losing.

Even so, that’s still left plenty for tobacco companies to pay.

First, of course, every plaintiff victory will be appealed by the tobacco lawyers.

Murray Garnick, a senior vice president at Altria, the parent of Philip Morris USA (which makes Marlboros), has been the de facto spokesman for the tobacco companies in much of this litigation. “Our fundamental case,” Garnick told Virginia’s Richmond Times Dispatch last month, “is that we’re selling a legal product that has risks that are well understood by the consuming public and that people should have the right to decide for themselves.”

And Garnick repeatedly has indicated the tobacco industry has no intention of settling these tobacco lawsuits – even if appeals courts uphold the growing volume of verdicts against it.

Does tobacco have pockets deep enough to handle 9,000 more cases in Florida alone? Can the price of cigarettes simply increase over and over enough to cover such industry costs?

Let’s see what happens when those big bills start to come due.

Written by Robert Trigaux

Tommy Cheung joins the call for HK$24 minimum

minimum_wage-increaseLast updated: April 21, 2010

Source: South China Morning Post

Clear the Air says:

this is from the Liberal Party – can you believe they are interested in the rights of the people , or their rich bosses whom they represent ? The Liberal Party delayed Hong Kong’s anti smoking legislation for 6 long years – how many Hong Kong people died because of that ?

Liberal Party warns of ripple effect of rise in wage level on businesses

Catering industry lawmaker Tommy Cheung Yu-yan – who got into hot water last month for suggesting a minimum wage of HK$20 an hour – has joined Liberal Party colleagues in proposing a rate of HK$24.

Cheung and party chairwoman Miriam Lau Kin-yee said that even at this level business would be severely affected by a “ripple effect” that would push up wages of workers already earning more than the minimum.

The suggestion was put to the Provisional Minimum Wage Commission yesterday along with one from the Hong Kong Confederation of Trade Unions suggesting HK$33.

The Liberal Party estimates that in addition to the 138,200 workers earning less than its suggested minimum, at least 400,000 earning up to HK$33 would also get a pay rise.

“A ripple effect is present anywhere when a minimum wage is introduced,” Lau said, citing the United States and Britain as examples.

“If the wage of a dish washer earning HK$20 per hour is increased to HK$24 per hour, a company also has to increase the wage of a pantry helper who earns HK$23 an hour as well as other workers who earn more than HK$24,” she said after meeting commission members.

“We believe the Provisional Minimum Wage Commission should also assess the impact of the minimum wage on enterprises.”

Liberal Party executive committee member Michael Tien Puk-sun said the wages of various workers would also have to be increased to offer incentives and to distinguish differences in job nature.

The party said its proposed minimum wage was consistent with international levels in terms of the number of workers benefiting and the ratio between the median wage and minimum.

Cheung said that as labour accounted for 30 per cent of costs in the catering industry, it would feel the greatest impact of all industries.

Citing a survey of 49 companies owning 1,867 restaurants with 75,000 workers, he said more than half the city’s restaurants were operating at a loss and pay increases would be a huge burden.

“Setting the rate at no more than HK$24 can forestall the loss of non-technical jobs and a spate of restaurant closures,” he said,

“At the end of the day, we do not want to see businesses shut down and low-skilled workers thrown into the street.”

Cheung dismissed talk that he had bowed to pressure in proposing HK$24 after the outcry that greeted suggestions the wage should be no more than HK$20. A man wearing a pig mask threw a HK$20 note at his feet after he said at a City Forum gathering than any amounts more than that would have a severe impact on Hong Kong’s employment, competitiveness and long-term investment.

After party and business allies distanced themselves from his idea, Cheung apologised on March 24. “I hope to let bygones be bygones,” he said yesterday, adding that the catering industry’s suggestion was made with serious consideration for business operations.

“Is HK$24 per hour enough or not? It is not our concern. What we look at is the influence on restaurants and how to protect the low-skilled workers from losing their jobs,” he said.

The Confederation of Trade Unions also met the Provisional Minimum Wage Commission yesterday and said the statutory minimum wage should be set at no less than HK$33 an hour.

The unions said the impact of such a rate was not as big as many people imagined.

“According to Census and Statistics Department figures, the total labour cost would only be increased by 1.6 per cent and the profit of all enterprises would only be decreased by 0.2 per cent when the minimum wage is set at HK$33 an hour,” the unions said in their proposal submitted to the commission.

“Even for enterprises depending largely on low-income workers, the total labour cost will only be increased by 8.4 per cent.

“We believe enterprises can still shoulder the increase.”

Secretary for Labour and Welfare Matthew Cheung Kin-chung said the Provisional Minimum Wage Commission was still collecting the views of various parties before announcing the minimum wage in July.

“The commission will consider a number of factors including the minimum wage’s impact on the labour market and business environment, Hong Kong’s competitiveness and living standards,” Cheung said.

Record £225M fine for supermarkets and tobacco giants over price fix scanal

cigarette-436103154Last updated: April 17, 2010

Source: The Mirror

Supermarkets and tobacco giants have been fined a record £225million for price fixing.

The Office of Fair Trading ruled Imperial Tobacco, Gallaher and 10 store chains unlawfully linked rival cigarette and tobacco product prices.

A seven-year probe found they struck secret deals between 2001-03 to raise or lower costs to shoppers.

Imperial, which makes Lambert & Butler, must pay £112.3million and Benson and Hedges owner Gallaher was given a £50.3million penalty.

Supermarket Morrisons has been fined £8.6million but is also liable for £11million imposed on Safeway following its takeover of the group.

The Co-op was fined £14million to which will be added Somerfield’s £4million, again after a takeover.

Asda’s fine is just over £14million while whistleblower Sainsbury’s was let off the hook for lifting the lid.

The OFT ruled there was “insufficient evidence” to probe Tesco but Shell was fined £3.3million and TM Retail, which owns Martins and McColls, faces a £2.6million hit.

First Quench and One Stop Stores were also fined. The Co-op and Morrisons plan to appeal.

So does Imperial, which said: “Discounts given to retailers were passed on to consumers in prices.”

Gallaher accepted the ruling.

Cigarettes up, and plain packaging compulsory to help stub out smoking

679px-cigarettes_health_warning_australiaLast updated: April 29, 2010

Source: Sydney Morning Herald

THE Rudd Government will launch a twin assault on smoking today by announcing steep increases in tobacco excise and laws requiring cigarettes and other tobacco products to be sold in plain packaging from 2012.

The excise increase, which will help fund the government’s health reforms, will be short of that required to lift the price of a packet of cigarettes to A$20, as recommended by the government’s Preventative Health Taskforce.

There was speculation last night that the excise increase would add at least $2-$3 to a pack of 25.

How the generic pack of cigarettes will look.

In what the Rudd government is hailing as a world first, it will also announce legislation to mandate standard packaging for all tobacco products, a move likely to incense the $9-billion tobacco industry. From January 1, 2012, all brands of cigarettes will be sold in plain boxes. The boxes will be the same colour and carry large, graphic health warnings. The brand of the cigarette will appear in a small font. The font style and size, as well as the position of the brand will be uniform.

The laws will ban the use of any colours, logos, brand imagery or promotional text that would in any way distinguish one brand of cigarettes from the other.

The government is trying to shift the policy emphasis to health after its decision to shelve its emissions trading scheme until at least 2013 has been roundly condemned by all sides.

The changes to tobacco packaging are based on research which found packaging is a subtle form of advertising that significantly influences smoking rates and habits. The government will test various packages before settling on a final design.

Labor is anticipating a nasty fight with the industry. The party does not accept donations from the tobacco industry, whereas the Liberal Party does.

Smoking kills 15,000 Australians a year despite the proportion of the population aged over 14 which still smokes having dropped from 30.5 per cent in 1988 to 16.6 per cent in 2007.

The government wants to reduce the rate of smokers to 10 per cent by 2018.

Rationalise tax on tobacco products to save millions of lives: Experts

the-histogram-of-cigarette-taxLast updated: April 9, 2010

Source: Business Standard

About 19 million lives could be saved every year if India increased tax on beedis to 40 per cent from the present 9 per cent and on cigarettes, 78 per cent from 38 per cent, said experts here today.

Director of the National Institute of Public Finance and Policy M Govinda Rao said the tax structure in India on tobacco was not based on nicotine content. Cigarettes are taxed based on their length. Tobacco taxes were not regularly adjusted for inflation and over time tobacco products were becoming increasingly affordable, he added.

A report — Economics of tobacco and tobacco taxation in India — by both Indian and international economists released here today states simplifying the tax system by reducing differential taxes across products will help convey a clear message that all tobacco products are harmful. The report is part of a series of the Bloomberg Initiative to reduce tobacco use.

Studies of price elasticity in India have found that a 10 per cent increase in tobacco prices is estimated to bring down beedi consumption by 9.1 per cent and cigarette consumption by 2.6 per cent.

Director of Centre for Global Health Research, Toronto, Prabhat Jha, said the number of smokers in India were increasing fast. In urban areas, there has been a near doubling of smokers with 13 per cent smoking prevalence in 1999 increasing to 25 per cent by 2006.

In addition, he said, quitting before a disease struck, was highly uncommon in India. “Only two per cent of Indian adults are ex-smokers as compared to 40 per cent in the US or UK, or 15 per cent in Thailand. With an estimated 120 million smokers, India has the second-largest group of smokers in the world after China.

The report points out that cigarette taxes of 38 per cent are way below the recommended rates of 65-80 per cent of retail price present in countries with effective tobacco control policies. Beedis are very cheap, with an average pack costing Rs 4. Taxes on beedis average only nine per cent of its retail price, it states.