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December, 2015:

Ukrainian officials appear to be lobbying for tobacco industry to keep taxes low

http://www.kyivpost.com/article/content/ukraine-politics/ukrainian-officials-appear-to-be-doing-tobacco-industrys-bidding-in-keeping-low-taxes-404980.html

Ukrainian officials appear to be lobbying on the side of the tobacco industry once again.

On Oct. 5, the Ministry of Finance proposed a 40 percent tax increase on cigarettes – bringing the price in line with inflation, like any other consumer product.

The parliamentary tax and customs committee, however, has countered the ministry’s proposal, arguing for a 20 percent increase – about half of the official inflation rate.

In other words, such a small increase will effectively make Ukraine’s cheap cigarettes even cheaper, which spurs smoking. Nearly 100,000 people die prematurely each year in Ukraine from smoking-related diseases.

The sharp currency devaluation – in which the Ukrainian hryvnia has lost two-thirds of its value in two years – has allowed lawmakers to promote a tax decrease as a tax hike.

In 2014, tobacco companies paid taxes of Hr 240 per 1,000 cigarettes and in 2015, this rose to Hr 300, according to a video released by industry expert Konstantin Krasovsky on Dec. 7.

The average exchange rate in 2014 was Hr 12/$1; thus far in 2015 it has been Hr 22/$1. This means the tax amounted to $20 per 1,000 cigarettes in 2014 compared with $13.6 in 2015.

Therefore, if the increase in 2016 is only 20 percent, $15.1 will be paid per 1,000 cigarettes at the current exchange rate of 23.75; for the 40 percent hike, the tax reaches $17.7 – raising the price of a cigarette pack by Hr 5 to Hr 8, or merely $0.21-$0.29.

Ukraine has some of the cheapest, lowest-taxed cigarettes in Europe, fueling illegal smuggling and contributing to higher smoking rates, poor health and early death.

Ukraine has some of the cheapest, lowest-taxed cigarettes in Europe, fueling illegal smuggling and contributing to higher smoking rates, poor health and early death.

“As a comparison, bread has seen a 70 percent price increase whereas cigarettes have only seen a 20 percent price increase. Therefore cigarettes have become more affordable,” said Andrey Skipalskyi, president of the Ukrainian Center for Tobacco Control. “A 40 percent (tax increase) is already a compromise and doesn’t include the real price increase.”

In his video, Krasovsky argues that if the excise tax increases by 40 percent, annual revenues to the state budget will increase by Hr 7 billion – a figure he based on a 10 percent decline in the number of smokers. But if parliament decides on a 20 percent increase, the budget will receive Hr 4 billion, a figure which relies on demand remaining the same.

The tobacco industry is famous for its underhanded lobbying tactics.

One of the difficulties for anti-tobacco groups is that there is no definition of lobbying in Ukrainian law.

“You can’t track the money or the members of parliament being paid…So what we do is monitor their statements and if someone is overtly pro-tobacco we shame them by calling them tobacco lobbyists,” said Skipalskyi.

According to Skipalskyi, the tobacco companies in Ukraine in recent years have fought hard against any increases in taxation. Higher taxes on cigarettes have been proven to be very effective in getting smokers to quit and preventing people from even starting.

Skipalskyi said the tobacco industry is on good terms with parliament’s tax committee head, Nina Yuzhanina, a member of the Bloc of President Petro Poroshenko, who defends her position as “pro-business,” according to Krasovsky and Roman Nasirov, her predecessor who is now head of State Fiscal Services.

Nasirov has argued against sharp tax increases on cigarettes , saying they will exacerbate Ukraine’s problem with illicit trade. But anti-tobacco groups accuse Nasirov and other officials of using this as an excuse.

“Every year they keep repeating the same mantra that it would increase illicit trade…It’s very important to separate illicit trade and tax policy. It’s up to the customs officials to police illicit trade on both sides. In Ukraine and in Poland,” said Skipalskyi.

Likewise Krasovsky pointed out that the problem with illicit trade is with cigarettes manufactured in Ukraine, not cigarettes coming from abroad.

An investigation conducted by investigative journalist Vlad Lavrov in 2009 asserted that the cigarette manufacturers in Ukraine are complicit in the illicit trade – estimated to be worth $2.1 billion a year. The investigation found that manufacturers produce a 30 billion cigarette surplus because of the country’s cheap production costs, which they then sell to smugglers at the same price as to a legal wholesaler.

Skipalskyi told the Kyiv Post that only the introduction of expensive tracking systems would allow customs officials to trace cigarettes back to a particular factory.

Japanese Tobacco Incorporated, Philip Morris and British American Tobacco, three of the four biggest manufacturers in Ukraine, said they only sold to licensed distributors.

The Ukrainian budget has benefitted significantly from tax increases on cigarettes. Between 2008 and 2015, the tax on cigarettes increased almost 10 times — from Hr 29 to Hr 300 – and state revenue increased from Hr 3.6 million to Hr 18.1 million.

Besides the revenue boost, higher cigarette taxes improve public health. As prices rose, according to Ukrainian State Statistic Service, the number of smokers in Ukraine decreased from 10.1 to 7.7 million people.

Finance Minister Natalie Jaresko agrees. In a statement on Dec. 8, Jaresko told reporters:

“The question of tax increases is painful one. However, from the point of view of the country’s health, I can’t not talk about it, because in every country excise tax policy is considered together with the health policy of the country. Because money from our budget also goes to health care,” said Jaresko.

This is a big step according to Skipalskyi: “Before Jaresko, I had never heard a minister view taxes in terms of health benefits.”

Krasovsky, a veteran anti-tobacco activist, said the government’s position is more important than that of parliament committees when lawmakers vote. Tobacco companies are producing more now in anticipation that the tax will go up next year, Krasovsky said, so Ukraine’s state budget won’t see benefits right away.

While Japan Tobacco International did not comment, Philip Morris and British American Tobacco said that tax increases should be gradual and take consumer income into account.

Tobacco companies outspend government in contest to addict smokers

http://njtoday.net/2015/12/27/tobacco-companies-outspend-government-in-contest-to-addict-smokers/

This giant gap is undermining efforts to save lives and health care dollars by reducing tobacco use, the leading cause of preventable death in the United States, the report warns.

In fiscal year 2016, the states will collect $25.8 billion from the 1998 tobacco settlement and tobacco taxes. But they have budgeted less than two percent of it – $468 million – for tobacco prevention and cessation programs, according to the annual report assessing state funding of such programs.

In contrast, the major cigarette and smokeless tobacco companies spend $9.6 billion a year – more than one million dollars each hour – on marketing, according to the most recent data from the Federal Trade Commission. This amounts to 20 times what the states spend on tobacco prevention.

Tobacco use kills more than 480,000 Americans and costs the nation about $170 billion in health care spending each year. Without strong action now, 5.6 million kids alive today will die prematurely from smoking-caused disease, according to the U.S. Surgeon General.

Garden State politicians squandered all the money due from a national settlement with tobacco companies, using bond deals to suck dry future revenues, so the latest budget from Republican Gov. Chris Christie includes nothing for nicotine prevention.

New Jersey has $4 billion in health care expenses directly caused by smoking but no money is allocated to combat tobacco use in the state’s 2016 budget although $186.8 million was estimated to have been spent in the state on tobacco company marketing in 2012.

Almost 16 percent of adults in New Jersey are smokers and nearly 12,000 deaths result from smoking in the Garden State each year, but this is worst in the nation for state spending on tobacco prevention.

Nicotine, the drug in tobacco, is highly addictive, while tar and other substances consumed when the product is smoked have been conclusively shown to cause cancer and equally devastating diseases.

New Jersey decided to bail out some of its tobacco debt in an arrangement that helped one investor cash in even though the state was under no obligation to rescue the bonds.

Treasurer Andrew Sidamon-Eristoff traded away an estimated $400 million in future tobacco revenues that would have flowed into New Jersey coffers starting in 2017 in order to make good on two bond issues that were headed for default because it allowed the Christie administration to patch a $92 million budget hole.

“Kids are still taking up smoking and we’re still losing lives,” said Marc Kaplan, communications director of American Cancer Society Cancer Action Network eastern division. “We’re thinking about the families who see their relatives lose their lives or suffer from smoking.”

Campaign for Tobacco-Free Kids, a national non-profit organization, released its annual Broken Promises to Our Children report Tuesday. The report looked at each state’s 2016 fiscal year budgets and projected state revenue from tobacco sales tax and 1998 tobacco settlement.

Every year, the Centers for Disease Control and Prevention recommends an amount that each state should put toward tobacco prevention efforts. For New Jersey, that recommendation was $103.3 million.

The state has allocated zero dollars for such efforts in the 2016 budget. Estimated state tobacco revenue from the tobacco settlement and state taxes is $921 million.

“The fact that New Jersey isn’t spending one penny in tobacco control and prevention is tragic,” Kaplan said. “One reason why we’re involved with this report is so our leaders can see this—hard and cold facts that are showing this.”

New Jersey Department of Health spokesperson Donna Leusner says there are still programs funded by the federal government that prevent or stop smoking.

They include the toll free NJ Quitline that offers gum and patches, Tobacco Age of Sale program, and Mom’s Quit Connection, which links pregnant women and new mothers with quit smoking specialists.

“The Department of Health strongly encourages everyone to quit smoking and there are many ways to do that including medication, patches, gum and counseling,” said Leusner.

Raise tobacco tax to save lives in China

From June 1 it has begun to feel like public health might be starting to win out in the battle against tobacco in Beijing. The Beijing smoke-free law now makes it illegal to light up in workplaces, restaurants, hotels and other public spaces across the city. But the battle against tobacco is far from over. Tobacco products still kill thousands of Chinese people every day.

http://usa.chinadaily.com.cn/opinion/2015-12/25/content_22803178.htm

There is a way to combat this, though: tobacco tax. Quite simply, a big enough tax increase could save millions of lives in the next decade.

Tobacco use significantly contributes to a fast growing epidemic in China: non-communicable diseases such as heart attacks, strokes, cancer and chronic pulmonary diseases. These conditions are now the leading causes of premature death, ill health and disability in China, accounting for more than 80 percent of total annual deaths. If tobacco use is not significantly reduced, it will aggravate the economic and social impact of an aging population, increasing the odds of a future economic slowdown, which in turn will pose a significant social challenge.

Experience from many other countries shows that not only is tobacco tax an effective means to reduce tobacco consumption and associated healthcare costs, it can also provide significant revenue which can be reinvested into other priorities.

The Philippines is a great example of how tobacco taxes are “win-win”. The 2012 Philippines “Sin Tax” Law has raised and simplified tobacco and alcohol excises, increased government revenues and reduced smoking. Retail prices of cigarettes increased significantly, with early data suggesting a decline in smoking prevalence.

Despite the decline in volume, revenue still increased – nearly doubling the Philippines’ Department of Health’s budget. This enabled fully subsidized health insurance to be provided to the poorest 40 percent of the population – 14 million families, or approximately 45 million people.

In May 2015, China’s Ministry of Finance announced an increase in tobacco taxation, of 0.005 renminbi per individual cigarette, alongside an increase in the wholesale tax rate. Importantly, this tax increase is flowing onto retail prices – making cigarettes a little more expensive across China as a result.

This tax increase adopted by the government of China, in line with its commitment to the World Health Organization’s Framework Convention on Tobacco Control, is an important step in the right direction. However, it is only one step. As the recently released 2015 WHO Report on the Global Tobacco Epidemic points out, tobacco taxes must be increased regularly in order to reduce tobacco use. Otherwise, if incomes rise more quickly than inflation, the relative cost of tobacco products can actually decrease over time.

This has been the case in China over the last decade as the economy has grown, incomes have increased, and tobacco products have become more affordable. Compared with the progress made in other BRICS (Brazil, Russia, India, China and South Africa) countries, China is lagging behind in raising tobacco taxes.

Higher tobacco taxes not only help smokers quit, but crucially they also prevent the next generation from taking up smoking in the first place. The vast majority of smokers start smoking when they are young. Higher tobacco taxes make cigarettes much less affordable for teenagers, helping to protect the coming generations from tobacco disease and death.

If tobacco control measures are not strengthened with steeper tobacco tax increases, China’s non-communicable disease epidemic will continue to explode over the next 20 years. This really has the potential to undermine the Chinese government’s agenda for harmonious and human-centred development, particularly by aggravating health inequities.

The WHO and the World Bank Group stand ready to support the government of China in advancing the tobacco taxation agenda. A healthy future for China depends on it.

Bernhard Schwartlander is WHO China representative, and Bert Hofman is World Bank’s country director for China, Mongolia and South Korea.

Academy of Public Finance

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So, you want to try smoking ? This is what you’ll achieve.

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Kenya: Lighting Up

http://www.westfieldtimes.com/world/kenya-lighting-up/16702/

Last year, the British parliament, despite fierce lobbying from tobacco companies, decided that from May 2016 cigarettes would be sold only in plain packaging in the UK.

Anti-smoking campaigners in that country were quick to declare it as the latest nail in the coffin of an industry that has seen consumption of its products shrink inexorably in the West over the past three decades.

But while it is true that health concerns, public education, and increasingly stringent controls on the advertising, sale and use of tobacco have brought about that decline in North America and Europe, anyone thinking to write the obituary of Big Tobacco had better think again, because elsewhere in the world, especially in the developing world, smoking is increasing dramatically.

Nearly 80 percent of the world’s one billion smokers now live in low- and middle-income countries, a figure that continues to rise year on year. In China, for example, an estimated 350 million adults are hooked on tobacco; smoking in Indonesia has more than quadrupled in the past four decades; and in Russia around a third of all teenagers will have tried their first cigarette by age 12.

But it is Africa that is probably most critical to the long-term future of the multinational tobacco firms, because it is relatively unexploited. For all the continent’s other woes, Africa has traditionally had some of the lowest smoking rates in the world, largely because most people can’t afford it. That, though, is now changing as parts of the continent become more prosperous, disposable incomes increase and populations mushroom.

It has become an enticing target for a profit-hungry industry as other routes to growth have been closed off by rules, directives and worries about life-threatening diseases.

With the most smokers in sub-Saharan Africa, Kenya is one of the biggest prizes on offer.

The problem for the industry is that Kenyan health officials are as aware as anyone else about the dreadful menace smoking poses to their nation’s health. Kenya was the first African nation to ratify the World Health Organization’s Convention on Tobacco Control. One of its key sections, Article 5.3, says that countries must “protect their tobacco control and public health policies from commercial and other vested interests of the tobacco industry”.

It gave officials the impetus to work with legislators on drafting strict regulations. These include putting graphic images on cigarette packets, banning advertising, promotion and sponsorship of tobacco and the imposition of a 2 percent health tax on every packet.

Professor Peter Odhiambo, chairman of the Tobacco Control Board, said: “We are already sitting on an epidemic of the cancers from tobacco. The tobacco problem is the most silent undeclared disaster in Kenya and therefore the more we delay the more we will see Kenyans dying.”

But as investigative journalist Purity Mwambia and filmmaker Giovanni Ulleri have been finding out, the industry hasn’t been slow to fight back, going to court in Kenya to argue about the legality of the rules and the proposed timetable for their introduction.

And now, most recently, disturbing allegations about the bribery of government figures have begun to emerge.

FILMMAKER’S VIEW

By Giovanni Ulleri

Around the town of Migori, beside the dusty country roads, you’ll find them: groups of farmers sharing a social moment away from their football pitch-sized plots of tobacco. Here, in one of the most important agricultural regions in Kenya, tobacco is king but, as I discovered in making Lighting Up, this is a crop that demands a high price from those who grow it and those who smoke it.

When I got a phone call from my former boss over the summer about me directing a film on tobacco in Kenya, I hesitated before saying yes. Not because I didn’t want to do it, but because of a potential conflict of interest; I was a former smoker – and in my eyes, once a smoker, always a smoker.

I was fully aware of all the known cancer risks of smoking and I had tried to quit many times over the years, but like most addicts I kept falling off the wagon and stealing a cigarette from friends. I had starting smoking as a stupid act of rebellion as a teenager behind the bike sheds at school and here I was heading off to Kenya to see how they have been trying to prevent other youngsters from doing what I did – lighting their first cigarette and starting down a path that could eventually lead to an untimely death.

On arriving in Nairobi and meeting up with my colleague Purity Mwambia, the first thing I noticed walking around the streets was how few people smoked in public.

Unlike any high street in the UK, where you see smokers huddled up in doorways of offices and in the cold and rain trying to light up, here in Kenya you are allowed to smoke only in designated smoking zones which, I imagine, makes the city centre of Nairobi one of the largest no-smoking zones in the world.

There’s even a 50,000 Kenyan shilling ($490) fine if you are caught smoking outside these zones. But despite this, eight billion cigarettes are smoked in Kenya every year and the government is trying to introduce new regulations to try to prevent what it fears is just around the corner: a veritable host of tobacco-related diseases.

However tobacco companies view Africa as one of their largest growing markets.

They are eager to keep their market share and to persuade policymakers, not to penalise them. We spoke to a young MP, Stephen Mule, who sits on the Kenyan parliamentary health committee. He told us that he was offered an expenses-paid fact-finding trip to the UK from Kenya’s largest tobacco manufacturer, British American Tobacco. What BAT didn’t know was that Mule’s father had died of a tobacco-related disease and nothing would ever weaken his resolve to introduce strict tobacco control regulations back home.

I also met his mother, who told me how she looked after her dying husband and how she tried to get him to stop smoking. She is rightly proud of her son, whose aim is to stop other Kenyan families from suffering the way his family did caring for a smoker.

But everyone involved in tobacco regulation in Kenya knows they have a fight on their hands. They are up against a rich and powerful industry, battle-scarred from years of similar confrontations in Europe and the US and determined to protect its burgeoning African businesses from government interference.

The more we began to look into this story, the more we began to realise exactly what that determination meant in practice.

Russian upper house approves bill banning snus

http://www.rapsinews.com/legislation_news/20151225/275119865.html

MOSCOW, December 25 (RAPSI) – The Federation Council, Russia’s upper house of parliament, on Friday approved a bill that prohibits the retail and wholesale trade of sucking tobacco (snus), RIA Novosti reports.

The bill drafted by the State Council of Tatarstan would introduce fines of between 2,000 and 4,000 rubles ($29-$58) for individuals, 7,000 to 12,000 rubles ($101-$173) for officials, and 40,000 to 60,000 rubles ($575-$863) for legal entities.

The regional authorities would have the right to introduce additional restrictions on trade in smokeless tobacco products, including a ban on retail sales.

The bill was drafted to further reduce smoking and to prevent the proliferation of new smokeless tobacco products in Russia.

Snus is a form of smokeless tobacco product. It is placed under the upper lip for extended periods. Snus is not fermented and contains no added sugar, but tobacco content in one portion of snus is approximately five times greater than in a cigarette.

The production and sale of smokeless tobacco in the EU was prohibited in 2001. India prohibited the sale of smokeless tobacco in 2003, although using smokeless tobacco is a longtime tradition. In 2004, serious restrictions were placed on the sale and use of naswar (a moist, powdered tobacco snuff similar to dipping tobacco or snus) in Turkmenistan. In January 2010, the sale of naswar, snus and other chewing products that include tobacco, lime or other non-tobacco products was prohibited in Belarus.

BAT scandal: We received letter from Raila office, no action was taken, says KRA

http://www.the-star.co.ke/news/2015/12/24/bat-scandal-we-received-letter-from-raila-office-no-action-was-taken_c1265650

No action was taken to suspend freezing Mastermind Tobacco Kenya’s accounts as asked by the Office of the Prime Minister, KRA has said.

CEO John Njiraini said tax demands against MTK were legitimate and “are not influenced by any party and will be defended at the right forum in the Tax Tribunal courts”.

“Tax matters are handled strictly in accordance with the legal provisions of which taxpayers or their appointed tax consultants are well appraised,” Njiraini said in a statement on Thursday.

In a letter dated May 4, 2010, former PM Raila Odinga “intervened” to stop Kenya Revenue Authority from freezing Mastermind’s accounts over non payment of taxes amounting to billions.

Njiraini urged all parties who feel aggrieved by the commission’s demands to avoid advancing partisan positions and “to await the rulings of the property mandated organs”.

“We consider ongoing public commentary on MTK tax issues to border on contempt of the property constituted judicial processes.”

This comes after the office of the Prime Minister wrote to then KRA boss Michael Waweru to “immediately suspend notices issued to Mastermind Kenya asking for payment within 50 days”.

Raila was Prime Minister at the time.

“You are requested to put on hold the enforcement action you have instituted against Mastermind Tobacco Kenya Limited in order to facilitate further review of the matter,” read the letter signed by acting PS Andrew Mondoh.

On December 23, the EACC said it will investigate the scandal surrounding British American Tobacco and MTK after they were invited by KRA.

Njiraini said the Authority held discussions with EACC after media reports highlighted “alleged unethical relations between staff of BAT and unspecified staff at KRA.

Here Are The Indian States That Drink, Smoke And Smoke Up More Than Others

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European court gives the go ahead for plain cigarette packs

http://www.newstalk.com/reader/47.301/61879/0/

“A wonderful Christmas present for children” – Minister gives ecstatic reaction

Minister for Children James Reilly has welcomed a European Court of Justice (ECJ) ruling that clears the way for plain packaging laws for tobacco products in Ireland.

The court has made a preliminary ruling this morning against tobacco giants Philip Morris and British American Tobacco.

They took proceedings to the ECJ over an EU directive which would see health warnings on two thirds of tobacco packaging.

The Children’s Minister James Reilly wants to go one step further in Ireland and ban tobacco branding on packets altogether.

He says: “Tobacco companies may have more manoeuvres, but the Irish Government stands ready to meet any challenge on the way to implementing this law.”

In its ruling this morning, the ECJ said the new EU tobacco directive of 2014 is valid.

Legislation to introduce plain packaging of tobacco products was unanimously passed by both houses of the Oireachtas, without any dissent.

Dr Reilly says more than 5,000 people a year die from smoking-related illness in Ireland.