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February 1st, 2010:

Law has failed to stop tobacco sales to minors

The picture is taken on 2006 by Neighbourhood & Worker's Service Centre. But after fighting for years, there is not action taken by the government yet.

The picture is taken on 2006 by Neighbourhood & Worker's Service Centre. But after fighting for years, there is not action taken by the government yet.

I refer to the report (“Cigarettes easier for teenagers to buy”, January 21).

The Neighbourhood and Worker’s Education Centre has once again concluded, as expected, that 86 per cent of retail outlets are willing to sell cigarettes indiscriminately to underage smokers.

Does anyone really believe that the employees of 7-Eleven and Circle K stores, news-stands and other outlets will put up with abuse arising from their refusal to sell cigarettes to under-age smokers? Clearly the relevant legislation has failed and it remains an uphill battle to get smokers to quit and to prevent future generations of young people from taking up this destructive habit.

Because retail outlets can flout the law it makes a mockery of the legislation.

If a retailer refuses to sell to minors they will simply find another store.

There are too many of these outlets which makes meaningful enforcement impossible. Nicotine is a poisonous and cancer-causing substance and its availability must be restricted not facilitated at every street corner as it is now.

It seems totally irrational for a poisonous substance to be as conveniently and widely available as beverages, snacks, newspapers and other daily necessities.

We must fight the aggressive importers of cigarettes by restricting their access to the market place.

Even raising the tax will have only a limited and temporary effect.

Reducing the number of cigarette-vending outlets as soon as possible can help to minimise a potentially huge health care bill for smoking-related illnesses and is in the best interests of the community.

source: SCMP, Ang Ah-lay, Causeway Bay

Cutting taxes not a solution

The Star Newspaper Malaysia, EUGENE MAHALINGAM

1st February, 2010

CONSUMER associations, non-governmental organisations (NGOs) and health experts have all slammed the argument by industry players that tax hikes lead to an automatic increase in smuggling.

In a previous report, the Malaysia Council for Tobacco Control (MCTC) president Koris Atan argued that price hikes deterred youths from taking up smoking, and in some cases, even encouraged habitual smokers to kick the habit.

“International research has shown that a 10% increase in cigarette prices can reduce cigarette consumption by 4%–8%. This translates to saving about 16 million lives worldwide by 2020,” he was quoted as saying.

The Federation of Malaysian Consumer Associations secretary-general Muhammad Shaani Abdullah reportedly said the argument of tobacco players was more akin to a “ransom weapon”, to deter the Government from increasing tobacco taxes, while the Malaysian Medical Association had called it a “laughable” excuse.

Royal Malaysian Customs Department enforcement and compliance deputy director-general Datuk Mohamed Khalid Yusuf said when there were tax hikes, there was “increased potential” for smuggling. “If tax increases, it attracts more interest. If it were zero tax, who would want to smuggle?”

However, he added that there were situations where smuggling was still a problem even without taxes being an issue. “Drugs are non-taxable but we still have a smuggling problem,” he said.

In 2000, an article in the British Medical Journal entitled “How can cigarette smuggling be reduced,” authors Luk Joossens and Martin Raw claimed that the correlation between high prices and high levels of smuggling claimed by the tobacco industry simply did not exist.

They claimed that factors such as corruption, public tolerance, informal distribution networks, widespread street-selling, and the presence of organised crime were more prevalent in elevating tobacco smuggling.

The report cited countries like Canada, which were unsuccessful in curbing their smuggling problems even after reducing their excise duties.

When Canada reduced its taxes in 1994, the real price of its cigarettes fell by a third. However, the prevalence of smoking increased in teenagers from 16% to 20% and also increased in the population as a whole.

Federal tax revenues meanwhile fell by C$1.2bil, more than twice the amount originally predicted.

The article also cited Spain as one of the few countries in the world to tackle its smuggling problem successfully without the need to reduce tobacco taxes.

Despite being among the cheapest in the European Union (EU), Spanish smuggled cigarettes had a market share of 15% in 1995.

It was established that Andorra (a small country in south western Europe) was one of the sources of smuggled cigarettes into Spain and the EU.

In 1997, there was a concerted effort at both national and European levels undertaken to reduce the supply of contraband cigarettes.

Close ties were forged between the authorities in Spain, France, Britain, Ireland, and Andorra and the European Anti Fraud Office to curb the supply of smuggled cigarettes from Andorra.

Actions included sealing the Andorran border, civil guard brigades patrolling valleys and hills to make smuggling more difficult and political pressure on the Andorran government by the EU and its member states, forcing it to enact new legislation making it illegal to smuggle tobacco into neighbouring countries.

As a result, contraband cigarettes, which had accounted for 12% of the Spanish market in early 1997, held only 5% by mid-1999. Sales of legal cigarettes increased 12% from 1997 to 1998 while tax revenues rose 25% during the same period.

According to the Spanish customs authorities, their success was not due to controlling distribution at street level (which was almost impossible) but by reducing the supply into the country at “container level” through intelligence, customs activity and cooperation, and technology.

Tobacco smuggling has become a huge global health concern – as it brings tobacco into markets cheaply, making it affordable to purchase and thus promote consumption.

It is also a circumvention of taxes and customs duties, causing government treasuries to lose billions in revenue each year.

Industry players argue that tobacco smuggling is caused by market forces owing to the price differences between countries, causing cigarettes to get smuggled from cheaper countries to more expensive ones.

JT International Bhd (JTI) corporate affairs director Shareen Rahmat said Malaysia’s cigarette prices were currently the second highest after Singapore in the Asean region.

“The retail price of a 20s pack category in Malaysia is higher by approximately RM5.80 per pack than that of a similar category in Indonesia,” she said.

Currently, a pack of 20 costs RM9.30, with the same in Singapore costing over RM27.

Industry players have urged the Government to curb the smuggling problem by reducing taxes, which will also, they say, help restore revenue.

“With prices of duty-paid cigarettes being much higher in Malaysia, there is great demand for cheaper and unregulated illicit cigarettes in the country.

“Due to unpaid taxes, illicit cigarettes can be bought for as low as RM2.50 for a pack of 20 sticks,” said Shareen.

Philip Morris (M) Sdn Bhd managing director Richard Morgan said Malaysia had one of the highest levels of illicit cigarettes in the world.

“The prevalence of illicit cigarettes in Malaysia was at a low level of 14.4% in 2004. However, it has steadily grown over the years and reached an all-time high of 38.7% in 2009,” he said.

Tobacco smuggling to get a whole lot tougher

Clara Hogan,

1 February 2010

Tobacco smuggling could get a lot harsher as an EP conference this evening, a UN Conference in March and a World Health Organisation report all point towards governments being too lax on the issue

European Union officials and international experts fighting against global illicit tobacco sales will meet tonight at a conference to discuss the ongoing concern over the illegal cigarette market just weeks before a vital United Nations meeting in March on the issue.

The UN will meet from 14 – 21 March on a new protocol that could secure a binding international agreement to combat the massive market of illegal tobacco sales. It will be the fourth meeting of the International Negotiating Body on the supplementary protocol to the already-in-place Framework Convention on Tobacco Control, which passed in 2005 and was the first treaty negotiated under the auspices of the World Health Organization.

Belgian Green MEP Bart Staes, who is hosting tonight’s conference in Brussels to push more EU leadership on the issue, said it is necessary to have strong action rather than simply more political talk.

“It’s essential that the EU takes the lead in the final negotiations and helps to win international support for a strong Protocol to combat the illicit tobacco trade,” he said in a statement. “Anything less risks resembling the disappointing outcome of the UN Climate summit in Copenhagen – plenty promising words, but no binding agreement.”

Proponents of the supplement argue illicit tobacco creation and smuggling undermine government taxes and attempts to improve public health. Illegal cigarette trade accounts for nearly 12% of all cigarette consumption worldwide, according to a report released by the International Union of Tuberculosis and Lung Disease in 2008. This takes away roughly 35 billion euro from governments in tax revenues each year.

The report also states smoking will cause more than 8 million deaths a year by 2030, of which more than 80% will occur in low and middle income countries, where tobacco use has been rising dramatically and illicit trade is the highest.

And because raising taxes, and therefore price, of cigarettes has been shown to decrease tobacco use in countries, officials say illegal sales undermine government efforts to do so.

The proposed protocol would put several actions into effect, one of which would require parties to set up international tracing and tracking systems with one focal point to enhance the ability of effectively tracing illegal sales. Another part of the protocol would require specified parties participating in tobacco trade to hold a valid license.

In a more 21st century approach, states under the protocol would need to restrict or ban Internet sales of tobacco, which contributes to a large part of global illicit cigarette trade.

People also can find making or smuggling tobacco attractive because there are less harsh penalties compared to those who engage in trading harder drugs. The protocol would include provisions that treat illegal cigarette activity as more of a serious crime.

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