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May 28th, 2015:

ITIC extracts from Legacy tobacco documents at UCSF

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Cost of a lifetime of smoking equivalent to an 800 sq ft flat, Chinese University study finds

Tobacco not only seriously harms health it ruins your wealth, Chinese University study finds

A smoker in the city will burn through more than HK$1 million in a lifetime, enough money – if invested well – to buy an 800 sq ft flat on Hong Kong Island, a Chinese University study found.

It found Hong Kong was the third most expensive place in the Asia-Pacific region for smokers, after Australia and Singapore.

Assuming consumption of one packet a day, Hong Kong smokers spend an average of HK$20,440 a year.

Vivian Lee Wing-yan, associate professor at the university’s school of pharmacy who conducted the study, said she hoped smokers could understand that quitting the habit would enable them to enjoy better wealth and better health.

“The money spent on cigarettes can be used on investment instead to potentially increase their assets,” Lee said yesterday, ahead of World No Tobacco Day on Sunday.

“Reducing the smoking population can significantly alleviate the disease burden and reduce public health expenditure.”

Smoking can cause a number of fatal conditions, such as heart and respiratory diseases and cancers. It also imposed a huge economic burden on the health care system, Lee said. But despite the many adverse effects of tobacco being recognised, many people had still not quit.

The study investigated the tobacco cost per person throughout their lifespan in Hong Kong, South Korea, Thailand, Malaysia, Singapore, the Philippines, and Australia. It assumed that the smokers started at the age of 18 and smoked one pack a day.

Australian smokers were most out of pocket, having to spend over HK$100,000 a year, followed by around HK$55,000 for Singaporeans.

Lee said if the smokers invested all the money they spent on tobacco, the returns when they retired at 60 years old were equivalent to the price of an 800 sq ft flat on Hong Kong Island, based on Standard & Poor’s 500 Index.

Lee estimated the annual economic loss caused by smoking in Hong Kong at over HK$11.3 billion. “We hope to provide a reference for the government to enforce tobacco control, and enhance anti-smoking policies.”

Department of Health figures show the smoking rate for people above 15 is 11.1 per cent in 2010, one of the lowest in the world.


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Cigarette age limit increased to 20

BANGKOK, 28 May 2014 (NNT) – The Cabinet on Wednesday approved the tobacco draft act which prohibits sale of cigarettes to those under 20 years old and raise punishment for offenders.

Deputy Prime Minister Yongyutn Yuthawong said the draft act increased the minimum legal age for cigarette purchase from 18 to 20 years and prohibited sale of individual cigarettes. The draft act also prohibits cigarette sale in some public places such as temples, public health facilities, schools and public parks, the deputy PM added.

The draft act bans cigarette companies from advertising their products as sponsors of contests and competitions. Cigarette advertising is banned in print and online media, TV and movies.

The penalty of imprisonment for those who sell cigarettes to people under 20 years old is increased from one month to one year and fine for smokers in non-smoking areas is raised from 2,000 to 5,000 baht.

WHO calls for action against illicit tobacco trade on World No Tobacco Day

GENEVA – Eliminating the illicit trade in tobacco would generate an annual tax windfall of US$ 31 billion for governments, improve public health, help cut crime and curb an important revenue source for the tobacco industry.

Those are the key themes of World No Tobacco Day on 31 May when WHO will urge Member States to sign the “Protocol to Eliminate the Illicit Trade in Tobacco Products”.

“The Protocol offers the world a unique legal instrument to counter and eventually eliminate a sophisticated criminal activity,” says Dr Margaret Chan, WHO Director-General. “Fully implemented, it will replenish government revenues and allow more spending on health.”

So far, 8 countries have ratified the Protocol, short of the target of 40 needed for it to become international law. Once that happens, the Protocol’s provisions on securing the supply chain, enhanced international cooperation and other safeguards will come into force.

The Protocol is an international treaty in its own right negotiated by parties to the WHO Framework Convention on Tobacco Control (WHO FCTC), which has been ratified by 180 Parties. Article 15 commits signatories to eliminate all forms of illicit trade in tobacco products.

The Protocol requires a wide range of measures relating to the tobacco supply chain, including the licensing of imports, exports and manufacture of tobacco products; the establishment of tracking and tracing systems and the imposition of penal sanctions on those responsible for illicit trade. It would also criminalise illicit production and cross border smuggling.

“The Protocol faces overt and covert resistance from the tobacco industry,” says Dr Vera da Costa e Silva, Head of the WHO FCTC Secretariat. “Manufacturers know that once implemented, it will become much harder to hook young people and the poor into tobacco addiction.”

The illicit tobacco trade offers products at lower prices, primarily by avoiding government taxes through smuggling, illegal manufacturing and counterfeiting. Cheaper tobacco encourages younger tobacco users (who generally have lower incomes) and cuts government revenues, reducing the resources available for socioeconomic development, especially in low-income countries that depend heavily on consumption taxes. This money might otherwise be spent on the provision of public services, including health care.

While publicly stating its support for action against the illicit trade, the tobacco industry’s behind-the-scenes behaviour has been very different. Internal industry documents released as a result of court cases demonstrate that the tobacco industry has actively fostered the illicit trade globally. It also works to block implementation of tobacco control measures, like tax increases and pictorial health warnings, by arguing they will fuel the illicit trade.

“Public health is engaged in a pitched battle against a ruthless industry,” says Dr Douglas Bettcher, Director of the WHO’s Department for the Prevention of Noncommunicable Diseases. “On this World No Tobacco Day, WHO and its partners are showing the ends that the tobacco industry goes to in the search for profits, including on the black market, and by ensnaring new targets, including young children, to expand its deadly trade.”

Policy makers should recognize that the illicit tobacco trade exacerbates the global health epidemic and has serious security implications. Ratification of the Protocol to Eliminate the Illicit Trade in Tobacco Products is a necessary step to combat these twin evils.

Editor’s note

Tobacco-related illness is one of the biggest public health threats the world has ever faced. Approximately one person dies from a tobacco-linked disease every six seconds, equivalent to almost 6 million people a year. That’s forecast to rise to more than 8 million people a year by 2030, with more than 80% of these preventable deaths occurring among people living in low-and middle-income countries.

The WHO Framework Convention for Tobacco Control (WHO FCTC) entered into force in 2005. Parties are obliged over time to take a number of steps to reduce demand and supply for tobacco products including: protecting people from exposure to tobacco smoke, counteracting illicit trade, banning advertising, promotion and sponsorship, banning sales to minors, putting large health warnings on packages of tobacco, increasing tobacco taxes and creating a national coordinating mechanism for tobacco control. There are 180 Parties to the Convention.

Significant mandates: JTI turns to Freshfields in latest tobacco challenge to plain cigarette packaging

The latest firm to win work challenging the UK government’s decision to introduce plain cigarette packaging, Freshfields Bruckhaus Deringer’s Tom Snelling has launched High Court litigation on behalf of Japan Tobacco International, the maker of Camel, Benson & Hedges and Silk Cut.

The UK’s second biggest cigarette seller after its £9.4bn purchase in 2007 of Gallagher, whose brands included Mayfair, Silk Cut and Hamlet Cigars, Japan Tobacco International (JTI) follows its rivals British American Tobacco and Philip Morris International in filing a suit against the plans to ban branded packaging from May 2017. Snelling is being supported by IP partner Giles Pratt and has instructed David Anderson QC of Brick Court chambers to bring the case before the courts.

The company has so far failed in a similar suit against the Australian government, which became the first nation to implement plain packaging legislation in December 2012 with the Tobacco Plain Packaging Act. The legal battle has not stopped there, however, with Ukraine, Honduras and Dominican Republic bringing a dispute against Australia over its plain packaging rules at the World Trade Organization (WTO).

JTI argues that plain packaging is unlawful and infringes important principles of UK and EU law, and other fundamental rights, and goes against obligations under WTO rules.

Earlier this year, British American Tobacco (BAT) instructed Herbert Smith Freehills (HSF) for its challenge against the UK government’s plans, as well as Hogan Lovells to advise on intellectual property issues, while barristers brought in include 39 Essex Chambers’ Nigel Pleming QC and One Essex Court’s Geoffrey Hobbs QC.

MPs voted to back plain packaging legislation by 367 to 113 in March following an independent review by Sir Cyril Chantler that found the measure was ‘highly likely…to reduce the rate of children taking up smoking and implausible that it would increase the consumption of tobacco.’

Assessment of the European Union’s illicit trade agreements

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Mr Othmar Karas: Your participation in the Eurasia Tax Forum

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