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August 30th, 2016:

Mayor looking to end Copenhagen tobacco investments

Owned bonds incompatible with city’s smoke-free ambitions

Copenhagen Municipality may be a smoke-free place to work, but it still owns bonds worth 6.5 million kroner in tobacco companies.

But those investments are about to go up in smoke, as the capital’s mayor Frank Jensen is pledging to offload all of the city’s investments in tobacco firms.

“We already have a clear green and ethical investment policy regarding not investing in companies that breach human rights, or earn money from coal and oil,” Jensen told Metroxpress newspaper.

“In my eyes, tobacco bonds are in the same league. So I will see how we can add the tobacco companies to our blacklist.”

Barred and blacklisted

Jensen has already been backed by the city’s deputy mayor for health issues, Ninna Thomsen, who agreed that investing in tobacco was an odd message to send.

Thomsen wants the municipality to blacklist all tobacco-producing companies.

“I am trying to ensure that the next generation will be smoke-free and Copenhagen is trying to become a smoke-free city – and yet we are investing in tobacco,” Thomsen said.

Earlier this year, Jensen announced plans to divest the city’s 6.9 billion kroner investment fund of all its fossil fuel holdings.

NTS probing foreign tobacco firms’ suspected tax dodging

SEOUL, Aug. 30 (Yonhap) — South Korean tax authorities are investigating foreign tobacco companies over suspicions that they evaded taxes on huge profits from a tobacco price hike last year, industry sources said Tuesday.

Citing the need to discourage smoking, South Korea marked up taxes levied on cigarettes by 2,000 won (US$1.79) in January last year, raising the price to 4,500 won per pack.

Cigarette makers are said to have raked in tens of millions of dollars in so-called inventory profit by keeping products shipped out before 2015 in stock and selling them after the tax hike for a huge gain.

According to the sources, the National Tax Service (NTS) has been conducting an extensive tax probe into Philip Morris Korea, which sells the Marlboro brand, and British American Tobacco (BAT) Korea, the vendor of Dunhill cigarettes.

NTS investigators are focusing on suspicions that some tobacco companies, aware of the expected price hike beforehand, pocketed “excessive” profits by stocking up on products and selling them after the tax increase, they said.

“A tobacco price hike can give cigarette companies large profits by enabling them to sell some products in inventory, which were shipped out before a price hike,” an industry source said. “The NIS seems to be investigating their suspected tax evasion or hoarding during the process.”

An NTS official refused to confirm the tax probe, citing an office policy that it can’t “comment on a tax audit into a specific taxpayer.”

Tobacco companies got a lot of flak for their inventory profit last year. Faced with a growing public outcry, South Korea’s sole tobacco maker KT&G Corp. announced in April last year that it would donate 330 billion won for social contribution activities. KT&G spent 80.8 billion won last year and plans to fork out 70 billion won this year.

Some watchers said KT&G may have been spared a tax audit because of its donation.

Philip Morris and BAT Korea complain that it is unfair and discriminatory against foreign tobacco companies for the NTS to exclude KT&G, which they argue reaped the largest inventory profit from the tax hike.

Philip Morris, British American Tobacco under tax audit

PMI, BAT criticized for failing to pay taxes despite huge amount of profits

The National Tax Service (NTS) has launched special audits of foreign tobacco makers here, according to industry sources on Tuesday. The move comes amid allegation that the companies did not pay taxes though they enjoyed tens of billions of won of “inventory profit” after the price hike in January last year.

However, the companies complain that the investigation is unfair because KT&G, the country’s homegrown cigarette maker, also enjoys massive profits but was not included in the special probe.

According to a source close to the matter, Philip Morris International (PMI) Korea, which manufactures Marlboro, and British American Tobacco (BAT) Korea, which makes Dunhill, are under the tax agency’s scope.

Tobacco makers pay taxes when they are shipping products. Since many of the tobacco products which were shipped before the price hike were held in inventory, those sold after the hike generated greater profit for the companies. The NTS is looking into whether the tobacco makers have paid the due amount of taxes and whether any illegalities were involved in generating the profit.

Three tobacco manufacturers, PMI Korea, BAT Korea and KT&G reportedly enjoyed the tax margin worth 150 billion won, 24 billion won and 330 billion won, respectively, from tens to hundreds of billions of won, respectively, after the price of a pack of cigarettes increased by 2,000 won.

Amid controversy, KT&G last year announced a plan for corporate social responsibility projects worth 330 billion, pledging it will return such profits to society. The company spent 80.8 billion won last year and will spend around 70 billion won by the end of this year.

Observers say that KT&G’s move influenced the NTS to launch occasional audits on the foreign companies. Both PMI Korea and BAT Korea finished regular audits in the first half of this year.

However, the foreign tobacco makers say that the government’s decision is unfair.

“Not only the NTS but also the Board of Audit and Inspection has been investigating foreign tobacco makers over the tax margin, but the fairness of such audits is questioned because they were just focusing on foreign tobacco makers,” said a PMI Korea official.

“Due to the nature of the tobacco industry, there is always stock in inventory. To return the tax margin to society, PMI Korea lowered the price of its products by 200 won and absorbed the loss,” she said, adding that PMI Korea has already announced a 21.5 billion won project for social contribution last year.

An NTS official said the tax agency does not affirm an individual company’s tax audit, but added that it launches an audit on numeric analysis.

Gambia to Implement Plain Packaging Law

The Minister of Health and Social Welfare, Dr. Omar Sey, has stated that The Gambia will soon join other World Health Organisation Member States that have already passed laws to implement plain packaging of tobacco products. He said it is time to act and they are ready to act now.

He was speaking on Monday during the commemoration of the World No Tobacco Day held in Banjul. The theme for this year’s celebration advocates for the introduction of “Plain (standardised) packaging” of tobacco products. The plain packaging was first introduced in Australia in 2012 and recently in the United Kingdom, France which was followed by other countries.

As part of the celebration, The Gambia has also won two of the five awards for the World No Tobacco Day 2016 throughout the African region. The WHO presents these prestigious awards to individuals, organisations, and institutions all over the world for their outstanding contributions to tobacco control.

Dr. Sey further said the World No Tobacco Day is commemorated internationally every year on the 31st May in order to underline the risks associated with tobacco use and to advocate for effective policies to reduce tobacco consumption.

According to him, plain packing of tobacco products restricts or prohibits use of logos, colours, brand images and promotional information, noting that it is part of an integrated approach to tobacco control that helps reduce attractiveness of tobacco packaging and eliminate tobacco advertising and promotion.

“As countries seek to embrace the plain packaging of tobacco products, tobacco companies all over the world are on the fight against this great initiative with massive misinformation campaigns,” he added.

“With the strong multi-sectorol team and media houses we have in The Gambia, I have the full assurance that The Gambia can effectively implement the promotion of plain packaging of tobacco products.’’

He added that his Ministry is in full support of the plain packaging and therefore, count on the continued support and collaboration from the media and the multi-sectoral team.

For his part, the WHO Country Representative, Dr. Charles Sagoe-Moses said this annual event is part of the WHO’s global efforts to recognise and honour individuals, organisations and institutions from around the world for their outstanding contributions to tobacco control.

According to him, 28 recipients of this year’s awards consist of individuals, institutions and organisations from the six regions of the WHO, adding that The Gambia alone has won two out of the five awards dedicated to the African region. He noted that the other winners came from Rwanda, Kenya and the Democratic Republic of Congo.

He described the award as a great achievement but hastened to add that they were not surprise as a lot of good work had been done and continues to be done in various aspects of tobacco control (policy formulation and implementation, taxation, legislation, public awareness and action, surveillance and multi-sectoral action) in The Gambia.

He revealed that their records show that The Gambia is indeed a great and widely recognised champion of global tobacco control efforts, having been among winners of this prestigious award since 2000.

Sambujang Conteh, the Executive Director of RAID-The Gambia, said that the country has registered tremendous achievements on tobacco control. He noted that the WHO’s prestigious award is a clear manifestation of the commitment and dedication of both the Honourable Minister and the inter-ministerial committee on tobacco control. He noted that tobacco use cannot be addressed in isolation.

by Arfang MS Camara