Clear The Air News Tobacco Blog Rotating Header Image

April 29th, 2011:

Tax rises shown to slash rate of smoking – Retailers report huge fall in cigarette sales

South China Morning Post — 29th April 2011

Fewer people are buying cigarettes and more are trying to quit since the government increased the tobacco tax by 41.5 per cent in February, while a previous rise caused a dramatic reduction in youth smoking, new statistics and university studies show.

Retailers say cigarette sales plunged by almost 40 per cent immediately after the increase was announced in this year’s budget.

This comes as lawmakers seek to revoke the order giving effect to the increase, saying it will hurt low-paid workers who cannot quit.

A 7-Eleven shop manager said tobacco sales had dropped by nearly 40 per cent since the announcement.

Before the tax rise, his outlet sold about 400 packs of cigarettes a day. This fell to 170 packs immediately after the budget, and although sales had risen since, his outlet still sold just 250 packs a day.

This was in line with the number of people who tried to give up. A total of 4,151 people have called the Department of Health’s quit line since March, which was 2.6 times more than in the same period last year.

And in February and March, some 634 people enrolled in quit-smoking programmes at the clinics of the department and the Tung Wah Group of Hospitals, 2.2 times more than in the same period last year.

“Some lawmakers always say raising tax significantly will hurt the grass roots, but in fact minor increases won’t be effective in pushing people to quit,” Council on Smoking and Health chairwoman Lisa Lau Man-man said.

In further evidence of the effectiveness of tax rises, a University of Hong Kong study found the 50 per cent increase in 2009 was the main reason the youth smoking rate fell 51 per cent from 2008 to last year.

Researchers surveyed 53,504 pupils from Form One to Form Five, and found that 3.4 per cent smoked. This was down from 4.8 per cent last year, which was itself a 43 per cent drop from 6.9 per cent in 2008.

School of public health assistant professor Daniel Ho Sai-yin, who carried out the survey, estimated that the 2009 tax rise had prevented 13,452 young people from taking up smoking, saving half of them from premature deaths.

Another study found 56 per cent of young people who called the university’s quit line were motivated by the tax rise. Of these, half had been able to kick the habit.

Ho said young people were the main target of tobacco companies’ efforts to expand their customer base, and they were the most price-sensitive. As two-thirds of the city’s smokers took up the habit in their teens, Ho said stopping young people from smoking was essential to reduce future tobacco-related deaths.

Meanwhile, a proposal by two lawmakers to repeal the public revenue protection order – which gave a provisional legal basis for the 41.5 per cent tax rise – seems likely to fall short of the votes needed to pass.

Lawmakers Albert Chan Wai-yip, of People Power, and Vincent Fang Kang, of the Liberal Party, will seek to repeal the tax increase at a Legislative Council meeting on Wednesday. But major parties, including the Democratic Alliance for the Betterment and Progress of Hong Kong and the Civic Party, will oppose the attempt. The Federation of Trade Unions will also vote in favour of the order, despite its opposition to the tax increase.

“Blocking the order will create administrative troubles, as the government will need to refund the tax it has already collected,” federation lawmaker Wong Kwok-kin said.

DAB lawmaker Wong Ting-kwong, an opponent of the tax rise, said he would go on urging the government to concede. “We believe that even if the order is passed, the government will make a concession if we can line up enough opposition.”

The director of Hong Kong University’s school of public health, Professor Lam Tai-hing, said that if legislators overturned the increase, it would send “a very wrong message” to young people. “They would think that even the honourable lawmakers are encouraging people to smoke.”

Some lawmakers say increasing the tax will push more people to buy illicit cigarettes, but Lam said the illicit trade had always existed regardless of the tax.

“What the lawmakers are doing is to reverse something that has already been established,” he said. “If they succeed, cigarettes would suddenly become much cheaper. When price decreases, demand will certainly shoot up. And when that happens, do you think the illicit traders will back off and step out of the game?”

NZ increases tobacco excise tax

Government Increases tobacco excise tax  Last updated 00:00 29/04/2010

Parliament has given overwhelming support to a tobacco tax increase that will raise the price of a pack of 20 cigarettes by about a dollar to around NZ$11, (HK$ 73) effective from midnight, with two more hikes in the pipeline.

After a debate under urgency tonight the bill was passed into law on a vote of 118-4 with all parties except ACT giving it full backing. ACT split its vote with one MP supporting the bill – John Boscawen – and the other four opposing it.

It has put in place three excise duty increases of 10 percent – one at midnight, the next on January 1 2011  and the third on January 1 2012.

Loose tobacco used by pipe smokers and to make roll your own cigarettes is being socked with a 14 percent increase immediately to bring it into line with cigarettes, and then the 10 percent rises that affect all tobacco products.

Because the increases are cumulative, prices will rise by about 33 percent over the next two years.

When the final increase takes place (Jan 2012) a packet of 20 cigarettes will cost around NZ$14 (HK$ 93) and a 30 gram pouch of loose tobacco about NZ$30.

The Government, which gets about $1 billion a year in tobacco excise, can expect to gather an estimated $200 million more.

Associate Health Minister Tariana Turia, a strong anti-smoking campaigner, introduced the bill and said the debate on it was going to be about life and death.

“We know that putting up the price is a powerful tool to reduce smoking,” she said.

“It forces people to cut back, but more importantly it provides a strong incentive for smokers to quit and helps dissuade young people from over starting to smoke.”

The Quit Group said it was preparing to see the number of people contacting Quitline for help to quit smoking to double or even triple.

“The last time we saw a significant taxation increase for tobacco was back in May 2000. Overnight we saw our call volumes almost triple from 6000 to 16,000 calls per month,” Quit Group chief executive Paula Snowden said.

“We fully expect to see an increase in quit attempts, which is great, and our advisors are there to help people using the tax increases as a prompt for thinking about those other, more sustainable reasons for overcoming their addiction.”

While it took on average six serious attempts to break the habit for good, those who contacted Quitline were five times more likely to succeed, she said.

Mrs Turia said 21 percent of New Zealanders over 15 were smokers and tobacco caused 5000 deaths a year.

“For too many years we’ve turned a blind eye to this…the price of cigarettes has plateaued and the reduction in the number of smokers has stalled,” she said.

“Helping smokers quit is a priority of this government and one of our health targets.”

Labour supported the move, with associate health spokesman Iain Lees-Galloway saying the party had consistently argued for measures that encouraged people to quit smoking.

“Sadly, legislation to increase the price of tobacco does not address issues such as point of sale advertising,” he said.

“Tariana Turia says she personally supports removing point of sale tobacco advertising, so why isn’t it happening?”

ACT MP Sir Roger Douglas said the Government was already getting about $1 billion a year in tobacco excise, and the increase would disproportionately impact on poor people.

“You have to weigh up the benefits that might or might not flow from this with individual freedom,” he said.

“The ‘I know what’s best for you’ mentality is getting out of hand…our flight from individual responsibility never ends.”

Sir Roger said that if the Government believed that raising the price of tobacco really worked, it should increase it by much more.

“Why not put it up 600 percent, then you would fix it,” he said.

Action on Smoking and Health (ASH) said it expected some smokers would quit in response to the tax increase.

“However a bigger increase would have resulted in great numbers of smokers quitting,” said ASH director Ben Youdan.

Last year the tobacco industry discounted prices heavily by around $1 per packet, so even with this increase we are treading water in terms of tobacco affordability, he said.

The Salvation Army said it applauded the move, but wished the Government had the courage to act as harshly against alcohol.

“We hope a government willing to recognise the harm tobacco causes will have the courage to more heavily tax alcohol, which has even wider community costs and detriments,” Salvation Army spokesperson Major Campbell Roberts said.

The Drug Foundation said the decision on tobacco put the prime minister’s rejection of an excise increase for alcohol in stark contrast.

“International and local experience consistently shows the effectiveness of excise tax increases on changing smokers’ behaviour – it helps current smokers cut down and deters potential new smokers from starting,” foundation executive director Ross Bell said.

The Royal New Zealand College of General Practitioners welcomed the excise tax, saying it would improve the health of many people.

Despite progress in tobacco control, more than one in five New Zealanders still smoke tobacco regularly and smoking prevalence was much higher for Pacific peoples (28 percent) and Maori (44 percent), the college said.

China to ban smoking in enclosed public places from May 1

Xinhua News Agency

BEIJING, April 29 (Xinhua) — Smoking will be banned in all enclosed public locations including hotels, restaurants, theaters and waiting rooms at railway stations and airports starting May 1, according to a regulation issued by the Ministry of Health.

Business owners should set up conspicuous non-smoking signs, carry out promotional activities to warn people of the dangers of smoking and encourage their employees to dissuade smokers from lighting up, according to the regulation.

The new regulation also says that outdoor smoking areas should not obstruct pedestrian walkways and that cigarette vending machines should be excluded from public places.

Yang Gonghuan, director of China’s National Office of Tobacco Control, said the regulation gives business owners a clear view of their responsibilities in relation to the smoking ban.

“It is realistic to demand a bigger role for these business owners in dissuading smokers,” Yang said.

It is estimated that China has more than 300 million regular smokers, and more than 700 million people are routinely exposed to harmful second-hand smoke, according to experts.

The regulation does not specify punishments for business owners who fail to meet the smoking ban’s requirements. It also does not specify penalties for people who continue to smoke in areas affected by the smoking ban.