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July, 2012:

Science Media Centre ≫ Blog Archive ≫ Budget 2012 and tobacco taxes ? Experts respond

Budget 2012 and tobacco taxes – Experts respond

Posted in Science Alert: Experts Respond on May 24th, 2012.

Included in today’s Budget 2012 announcements was the plan to increase tax on tobacco and allocate new funding to prevent the uptake of smoking and to help current smokers quit.

Tobacco excise taxes will increase by 10 per cent a year on 1 January in each of the next four years as part of a wider government programme to prevent young people from taking up smoking and encourage existing smokers to quit.

This will be in addition to the annual inflation-indexed increases in tobacco excise, and follows a 40 per cent increase in excise since April 2010.

Budget 2012 also provides $20 million over the next four years for a new innovation fund, Pathway to Smoke-Free 2025, for programmes to discourage smoking uptake and help more New Zealanders give up.

More information and comment from Associate Health Minister Tariana Turia can be found in this Media Release.

A more detailed analysis of the tax increases can be found in the treasury’s Regulatory Impact Statement on tobacco excise tax in the 2012 Budget.

The Science Media Centre contacted experts for further comment:

Prof Janet Hoek, Department of Marketing, University of Otago, responding to our questions:

Is there a strong evidence base that increasing the cost of tobacco leads to decreased consumption?

“Yes, we know that increasing tax stimulates quit attempts. Internationally, excise tax increases are recognised as a very powerful smoking cessation tool.

“Consumers are more responsive to price than they are to any other marketing intervention. We know that most smokers (over 80% according to work Associate Nick Wilson from UoO has undertaken) regret the fact they started smoking and would like to be smokefree. A tax increase will stimulate many of these people to make a quit attempt and successfully become smokefree.”

“We also know that there is strong public support for more progressive tobacco control measures – even smokers support excise tax increases if the additional tax revenue is used to support cessation programmes and treatments (see work by Nick Wilson here).

Is there is a possibility that increasing prices will lead to homegrown tobacco becoming more widely used and a black market emerging?

“I know tobacco companies have suggested black markets will emerge in response to other policies (such as plain packaging) but I have never seen any evidence to support these claims and closer analyses of the industry’s claims have raised serious questions about their validity (see the ASH website for more information). I understand from colleagues that home grown tobacco is not particularly palatable (it obviously lacks the many chemical additives tobacco companies add to enhance palatability). However, this is probably a question for a health economist to comment on more fully.

“I would direct those interested to a comment by Simon Chapman (Professor of Public Health at the University of Sydney)and a New Zealand Institute of Economic Research review of an industry commissioned report on illicit tobacco trade.”

Is cost likely to have an impact on the uptake of smoking among young New Zealanders?

“I think there is little doubt that tax increases will reduce smoking initiation among young New Zealanders. The latest ASH Year 10 survey data (a survey of 14 to 15 year olds) shows smoking prevalence has reduced dramatically over the last 12 years (see here). The decline in daily and regular smoking from 2010-2011 was the largest in nearly a decade and it seems reasonable to assume this is the effect of excise tax increases taking effect. Young people often access tobacco through social supply routes and price increases would logically make older smokers less willing to share their tobacco.

Would you be able to comment on the ethical situation presented by imposing extra costs on addicted individuals (who became addicted to tobacco under a previous, more tolerant series of governments)

I think it’s very important to use the extra revenue generated from tobacco taxes to help smokers quit and I support a hypothecated excise tax. We know most smokers want to quit and make multiple quit attempts to rid themselves of their addiction to nicotine.

“I believe governments should provide stimuli that prompt quitting as well as support to ensure it succeeds. We cannot be bound by the errors of the past and instead should focus on using effective public policy to ensure tobacco is clearly seen as a toxic and lethal product, the tobacco industry tightly regulated and smokers themselves given every assistance to quit.

“I believe the ethical problem would arise if, knowing as we do the harms caused by using tobacco, governments did nothing to curtail its use, restrain the tobacco industry, or support smokers to quit.”

Aside from tax increases, what do you believe would be the most effective initiative to decrease smoking rates?

“I don’t believe there is one simple alternative to excise taxes. Instead, I think we need to recognise the different groups within the wider smoker population and the different behaviours we want to elicit. For young people, we want to ensure they do not experiment with smoking and go on to become addicted smokers. Tax increases will deter initiation, but so too would more effective warning labels (labels that resonate with the concerns young people have, which are typically not cancer or impotence but whether others find them attractive), plain packaging that exposes tobacco as nothing more than a poison, and campaigns that reinforce smokefree behaviour as a norm and the ‘new cool’ (as the Health Sponsorship Council’s excellent work has done).

“For older smokers, health concerns are much more salient, so warning labels and advertising also need to speak to their anxieties and provide solutions. We have a world class Quit line but could do much more to make Nicotine Replacement Therapy (NRT) available to smokers. Bizarrely, tobacco is widely available at nearly every corner dairy, but NRT is not; we have no licensing system for tobacco retailers, so anyone can sell this lethal product. We need to make quitting and cessation products as ubiquitous as tobacco products are not, and we need to reduce the visibility, salience and accessibility of tobacco products. Restricting supply so few retailers sell tobacco and increasing smokefree outdoor areas (for which strong public support exists) would make tobacco an inconvenient and abnormal product to use. These measures would make it harder for young people to start smoking and easier for existing smokers to quit (it would remove the many cues that maintain tempt quitters and militate against cessation).

“I’m very interested to see the detail of the “Pathways to a smokefree 2025″ document. I’m pleased to see that the government recognises the need to put in place specific strategies to realise this goal. Associate Health MinisterTariana Turia has worked hard to put in place more progressive tobacco control policies and we know there is strong public support for these. Work Richard Edwards (Otago) has just completed makes it very clear that the public are looking to politicians to introduce stronger tobacco control measures.”

Dr George Thomson, Senior Research Fellow, Department of Public Health, University of Otago, Wellington, comments:

“Helpful for health benefit, but the 10% rise steps is an optimal level to increase government tobacco tax revenue (as seen by the predicted $528m extra revenue over 4 years). Optimal for tobacco industry, as 10% increases (7-8% tobacco price rise if the tax is passed directly on) will enable them to blunt the perceived price rise for most smokers (as opposed to a 20-30% tax rise). They can (i) temporarily cut their gross margins, (ii) by staging the retail price rise over several months, the rise perceived by the smoker could be smaller. The industry generally will aim to provide smokers with, or encourage smokers to, find ways to smooth the transition to higher prices, such as providing lower cost brands.”

Is there a strong evidence base that increasing the cost of tobacco leads to decreased consumption?

“There is strong scientific evidence that in high-income countries such as New Zealand, tobacco price increases (especially if real incomes are static) will reduce smoking by low-income groups more than for high-income groups. Price increases reduce youth smoking initiation, and reduce smoking prevalence in youth more than for adults.

“Perhaps most important as evidence is the industry response – to ensure that there are low price brands.”

Is there is a possibility that increasing prices will lead to homegrown tobacco becoming more widely used and a black market emerging?

“The main NZ problem at the moment appears to be the difficult legal situation in prosecuting Motueka area growers – better law would help. There is very little evidence that I have seen of palatable tobacco being cured outside Motuekain anything more than minute amounts, and I have seen no evidence of home grown sales outside of the Motuekasupplies. The growth of any black market from home grown depends largely on the resources given to Customs. The larger risk is of stolen retail and wholesale tobacco – and the solutions there are (i) the insurance companies and (ii) requirements for safe storage and transit (as with other highly portable dangerous addictive drugs).”

Are there overseas examples of excise taxes effectively decreasing smoking rates?

“Recent Australian studies, one retrospective and one a prospective modelling study, found strong effects from price rises. The first showed a 10% prevalence decline associated with a rise in a cigarette pack price equivalent to 1% of gross average weekly earnings. The second indicated that a price rise and a television campaign could reduce daily smoking to 10% by 2020. When tobacco taxes are increased, the stronger and more comprehensive the tobacco control co-interventions are, the greater the total effect on smoking behaviour”

“The evidence from California, New York, Uruguay, Ukraine, and Canada indicates that inflation-adjusted price rises of over 30% (or 20% and over if there are strong co-interventions as in California and Uruguay) are associated with prevalence declines of between 11 and 27%, over a period of up to four years”

Is cost likely to have an impact on the uptake of smoking among young New Zealanders?

“Price increases reduce youth smoking initiation, and reduce smoking prevalence in youth more than for adults. Reviews have consistently reported that tobacco price increases decrease youth smoking initiation and prevalence.Chaloupka et al found ‘sufficient’ evidence that not only do price increases reduce youth smoking more than for adults, and reduce youth initiation, but there is a further greater impact on the transition to regular use.

“Other research using tobacco industry documents supports the effectiveness of price in reducing smoking, especially for youth. The effectiveness for youth of price increases does not appear to decrease over time for a jurisdiction, even where it may decrease for adults. Australian research demonstrates that tobacco price increases there during 1990-2005 were associated with much lower youth smoking.”

Would you be able to comment on the ethical situation presented by imposing extra costs on addicted individuals?

“Tobacco taxation contributes substantial benefits at the population level by protecting health (i.e., by deterring the uptake of smoking by youth, by promoting quitting, and by reducing harm from exposure to second-hand smoke (SHS)). However, tobacco taxes can contribute to financial hardship among low-socioeconomic status populations where smoking persists. Such taxes can contribute to autonomy, by reducing SHS exposure to non-smokers, and by allowing freedom from nicotine-dependency for those who quit smoking or do not start regular smoking as a result of high tobacco prices.

“Furthermore, increases in tobacco taxation may reduce health inequalities and so contribute to justice. Nevertheless, the additional tax burden imposed on smokers who wish to continue to smoke, or are unable to quit, can be considered unjust. The autonomy of such smokers may be partly impaired. Although tobacco tax can be regarded as ethically justifiable because of its substantial overall benefit to society, there is substantial scope for policy changes to further reduce any harms and injustices for those populations who continue to smoke.

“Our research has found that at the population level, the estimated harm to life expectancy from tobacco taxation (via financial hardship) is orders of magnitude smaller than the harm from smoking. Policy makers should be reassured that tobacco taxation is likely to be achieving far more benefit than harm in the general population and in socioeconomically deprived populations.

“The dedication of at least some tobacco tax revenue to effective tobacco control programs can reduce the ethical problems of raising revenue through taxes on tobacco. The ethical problems arise both from the addictive and commonly lethal nature of tobacco, and from the regressive nature of tobacco taxation.”

Aside from tax increases, what do you believe would be the most effective initiative to decrease smoking rates?

“The major changes necessary are upstream – making the policy process more transparent – donations, lobbying etc. More immediate changes needed include:

  • Minimum retail price and capped pre-tobacco tax price for the industry (eg, capped price at $2/20 pack;minimum retail price of $18 and increasing with further taxes)
  • No duty free (as in Hong Kong, Singapore)- Australia is reducing their allowance
  • Denormalisation of the industry, products and smoking
  • ‘Truth’ type media campaigns
  • Bigger and better warnings, and plain packs and products
  • Separating alcohol from smoking (eg smokefree alfresco, tobacco-free alcohol sales-places)
  • Where and how tobacco is supplied – eg, Reduced retail availability, conditions of licenses; no postal or courier delivery,
  • Product controls – what is supplied: Reduced product palatability (eg, removal of all additives, nicotine enhancers, flavours); requiring fire safe products (no accelerants)
  • Smokefree outdoor areas by national law – bars, parks, shopping streets, patrolled beaches

Peers back smoking ban for cars with children present

24 July 2012 Last updated at 08:24 GMT

Description: Man smoking in car

Related Stories

Peers have backed plans to ban smoking in cars when children are present, but supporters admit they do not have government backing for the move.

The House of Lords approved Lord Ribeiro’s private member’s bill to make offenders liable for a £60 fine or attendance at a smoke awareness course.

The measure would need the support of MPs to become law and David Cameron has questioned whether it is justified.

He has suggested it would have serious implications for personal freedoms.

Mr Cameron told MPs last year that while he backed the ban on smoking in pubs, he felt “more nervous” about proscribing what people should and should not do in private vehicles.

‘Raise the ante’

Parliament needed to have a “serious think” before taking such a step, he added.

The Lords voted through Lord Ribeiro’s bill – which was backed by many health campaigners and charities – on the nod on Monday.

The Conservative peer said there was not strong government support for legislation in the area, with ministers favouring education as a way of persuading parents to change their behaviour.

He said most smokers did not do so while driving their children but there was a “hard core” of parents whose behaviour had to be addressed.

The proposed legislation would “raise the ante” over the issue and remind ministers there were other options should their approach not succeed in protecting children from harm.

Labour MP Alex Cunningham introduced legislation urging a ban in the Commons last year but despite clearing its first legislative hurdle, it faced significant opposition from MPs of all parties

China The Big Brands Era Begins

How Ironic:

China’s vice-premier Li Keqiang charged with the wellbeing of the nation  and his brother Li Keming  who is the deputy head of the China State Tobacco Monopoly Administration.

Two brothers in charge of opposite causes.

China: The Big Brands Era Begins

By Allen Liao

China’s tobacco industry has ushered in an era of rapid development of its big competitive cigarette brands through a fundamental structural reform over the past few years, characterized by the appearance of well-known big brand families and the permanent disappearance of thousands of little-known small cigarette brands.

In 2010, there were 13 Chinese cigarette brands each with an annual sales volume of over 1 million cases (50 billion cigarettes), including six each with an annual sales volume of over 2 million cases.

Big brands structure

The year 2010 saw the rapid development of big competitive cigarette brands in China.

“In the year, we had 13 cigarette brands each with an annual sales volume of over 1 million cases and 15 brands each generating over RMB20 billion (US$3 billion) in annual commercial wholesale income,” director-general Jiang Chengkang of the State Tobacco Monopoly Administration (STMA) recalled recently. “Therefore, big competitive cigarette brands showed a greater role in dominating the marketplace.”

Of the 13 cigarette brands each with an annual sales volume of over 1 million cases in 2010, there were six each with an annual sales volume of over 2 million cases – Mount Hongtashan, Baisha (White Sand), Hongjinlong (The Red Golden Dragon), Honghe (The Red River), Double Happiness and Hongqiqu (The Red Flag Canal). In particular, Mount Hongtashan took the first place with an annual sales volume of 2.7452 million cases. In the year, key cigarette brands designated by STMA saw their value rising sharply. For example, Chunghwa saw its annual sales soar to RMB76 billion, while Yunyan (Yunnan Tobacco), Furongwang (The Hibiscus King), Mount Hongtashan, Liqun (Benefiting All) and Baisha each saw their annual sales rise to over RMB40 billion.

Of the 15 brands each generating over RMB20 in annual commercial wholesale income, there were six with annual commercial wholesale income reaching over RMB40 billion – Chunghwa, Yunyan, Furongwang, Mount Hongtashan, Liqun and Baisha. In particular, Chunghwa saw its annual commercial wholesale income exceed RMB74 billion in the year. For many consecutive years, Chunghwa has remained on top of the list of big Chinese cigarette brands in terms of annual commercial wholesale income.

The rapid development of cigarette brands in 2010 meant a great success for the tobacco industry, achieved in the first year of its five-year plan for stepping up brands development. In a work report delivered at the 2010 national tobacco work conference held in Beijing, Jiang Chengkang, for the first time ever, put forward the “532” and “461” brands development strategies of STMA.

The “532” development strategy provides that in a period of five years or longer, efforts will be intensified to develop two well-known cigarette brands each with an annual output of 5 million cases, three each with an annual output of 3 million cases and five each with an annual output of 2 million cases.

And, the “461” development strategy provides that by the year 2015, efforts will be intensified to develop 12 highly influential cigarette brands each capable of generating over RMB40 billion in annual sales income, including six each capable of generating over RMB60 billion in annual sales income, and one capable of generating RMB100 billion yuan in annual sales income.

License production

To promote development of big competitive cigarette brands, STMA stepped up efforts to urge tobacco manufacturers to introduce cigarette production under license in 2010. In the year, STMA promulgated the Opinions on Guiding the Work of Cigarette Production under License, worked out relevant plans, made relevant policies and issued rules for regulating accounting. It designated 18 cigarette factories to introduce cigarette production under license in the year.

Deputy director-general Li Keming of STMA said that introduction of cigarette production under license was an effective approach to reform the structure of resources for cigarette production, with development of big competitive brands at the core, and that it would play a crucial role in promoting cigarette production in China to a higher level.

In late 2010, China National Tobacco Corporation (CNTC) invested RMB10.885 billion in technological transformation of the enterprises designated to introduce cigarette production under license, to assure the quality of cigarettes produced under license. Commenting on prgress made in 2010, Wang Ping, director of the Economic Operation Department of STMA, said that breakthrough had been made in terms of the quantity of cigarettes to be produced, the scope of production, construction of production bases and the issue of annual cigarette production quotas.

In 2010, the designated enterprises produced 259 billion cigarettes (5.18 million cases) under license, up 25.4% year-on-year, including 205.66 billion cigarettes of key cigarette brands designated by STMA, accounting for 79.4% of the total. The introduction and development of cigarette production under license has played a great role in promoting the development of big competitive cigarette brands. In the year, Mount Hongtashan was the biggest winner in the introduction and development of this segment, with the output of cigarettes produced under license reaching 51.715 billion cigarettes, accounting for 35.91% of the total output of the Mount Hongtashan brand family in the year. For Baisha, its output of cigarettes produced under license reached 43.9 billion cigarettes accounting for 30.93% of its total cigarette output in the year. And, the output of cigarettes produced under license of Double Happiness brand family reached 31.125 billion cigarettes (622,500 cases), accounting for 29.71% of the total cigarette output of this big brand family in the year.

Wang Ping said that in 2011 STMA would increase annual quotas for the production of cigarettes under license by 50 billion cigarettes to a total of 309 billion cigarettes, from the level of 259 billion cigarettes in 2010.

According to STMA’s relevant development plan, the annual output of cigarettes produced under license by the tobacco industry will have reached 600 billion cigarettes by 2015, which will have accounted for almost half of the annual cigarette output of 1,450 billion cigarettes the cigarette brands covered by the “532” development strategy by the year.

Status of big brands

As far as the amount of sales income of cigarette brands in 2010 was concerned, Chunghwa proved itself as a big winner by generating RMB76.19 billion in annual sales income, while the top 12 brands in terms of the size of annual sales income generated a total of RMB488.214 billion in sales income, up 26.2% year-on-year.

The aforesaid figures suggest that big competitive cigarette brands are of an increasingly important status in the tobacco industry. Take Chunghwa for example. In 2005, the cigarette output of the Chunghwa brand family was barely more than 12 billion cigarettes.But in 2010, it reached a high of more than 35 billion cigarettes, meaning a sharp increase of 23 billion cigarettes, or nearly twofold, in a period of just five years. Computed by the sales volume in the first half of the year, the output of Chunghwa is expected totop 45 billion cigarettes in 2011.

In 2010, the top five grade one cigarette brands in terms of the annual sales volume were respectively: Furongwang, Chunghwa, Yuxi, Huanghelou (The Yellow Crane Tower) and Liqun, which took 68% of the domestic cigarette market shares. When the sixth and seventh brands (Yunyan and Suyan) were taken into account, the top seven grade one cigarette brands actually took over 80% market share in the year.

The rapid development of big competitive cigarette brands has the support of economic development. Along with rapid development of the Chinese economy, the number of Chinese high-end consumers, defined by Paris-based BNP Paribas as those with family assets worth RMB300,000 and higher, and with an annual family income of RMB100,000 or higher, is growing fast. In 2010, this group of people was estimated to number around 250 million. It is this group that directly supports sustained growth in the consumption of high-grade cigarettes.

Computed by a same standard, the sales volume of grade one cigarettes in China reached some 125 billion cigarettes in 2007. But in 2010, it reached a high of 229 billion cigarettes, meaning a sharp increase of 100 billion cigarettes in a period of just three years, with an average annual increase of over 20%. It is expected that the market share of grade one cigarettes in China in 2015 will have reached nearly 45 billion cigarettes, double the amount in 2010.

Hopes and worries

In 2011, the tobacco industry is expected to give birth to big competitive cigarette brands each with an annual sales volume of 150 billion cigarettes or higher, while sources with the tobacco industry generally have high expectations on the development potential of Mount Hongtashan, Baisha and Double Happiness.

Computed by the sales volume of key cigarette brands in the first half of 2011, the annual sales volume of Mount Hongtashan is expected to top 150 billion cigarettes in the whole of 2011; there will be four cigarette brands with annual sales volume to topping 100 billion cigarettes in the year; the brands of Baisha, Double Happiness, Honghe and Yunyan will continue to take the lead in the annual production capacity; Baisha and Double Happiness are expected to top 150 billion cigarettes in terms of the annual sales volume on the basis of further development; the number of cigarette brands with an annual sales volume of 50 billion cigarettes or more is expected to reach a total of nine by the end of the year; and such high-end brands as Furongwang and Liqun are expected to rank themselves among those with annual sales volumes of 50 billion cigarettes or more by the end of the year.

It is expected that Chunghwa will generate over RMB90 billion in annual wholesale income in 2011 – almost reaching the goal of RMB100 billion in annual wholesale income. In the year, there will be five cigarette brands each with their wholesale income exceeding RMB50 billion; Yunyan, Furongwang and Double Happiness will see their annual wholesale income each reach or exceed RMB60 billion; Mount Hongtashan and Liqun are only one step away from reaching the goal of generating RMB60 billion in wholesale income; and Baisha, the Yellow Crane Tower and Yuxi will see their wholesale income each exceed RMB40 billion.

Therefore, we can say that the development of cigarette brands in China will officially enter the era of “150 billion cigarettes” and “RMB90 billion” in 2011, when big competitive cigarette brands will be in a period of continued rapid growth.

However, behind the rapid development of big competitive cigarette brands, there also exist some worries. Although Chinese cigarette brands are in a favorable trend of development, some brands have problems.

While national-level cigarette brands have seen their national production capacity grow year-on-year, their market shares increase steadily and their degree of concentration further rise, it has become a relatively serious problem that some brands still comprise low-grade products. For example, of the 29 key cigarette brands designated by STMA, 15 have a single-case sales income below the national average. In 2010, these 15 brands generated a total of RMB268.38 in annual sales income, up 16.1% year-on-year. The growth mainly relied on enlargement of the annual production capacity. For these 15 brands, growth in the annual sales volume contributed to driving up growth in the annual sales income by 64.9%, but contributed to driving up structural growth by only 35.1% in the year.

Another relatively serious problem is that cigarette brands do not appear to be powerful enough despite their large size. Over recent years, although STMA has done a great deal to reduce the number of existing cigarette brands in China year-on-year, some cigarette brands have continued creating more and more specifications. Many tobacco manufacturers, in seeking effects of “enlargement”, have chosen to adopt simple and relatively easy approaches to reform the structure of their brands merely by converting their phased-out brands into new specifications of their remaining leading brands.

To solve such problems, steps should be taken by tobacco manufacturers to reduce the number of existing specifications, conduct in-depth research towards improving the structure of cigarette products, focusing their energy on developing leading specifications that will be highly competitive in future. In the process of research and development of new products, besides attaching importance to catering to the favorite taste of consumers, doing a good job of reducing the content of tar and other harmful substances in cigarette products and creating remarkable, unique products, tobacco manufacturers need to develop a rational product range in accordance with the status of their brands.

Although there will be one challenge after another in the process of development, there will be final winners in the game. The brands emerging victorious will definitely be those with a long-term development capacity and that are well received by consumers which will be able to overcome all the obstacles and squeeze out the competition.

WHO urges China to tax smokers

By Shan Juan and Wang Qingyun (China Daily)

Cigarette tax should be increased to combat nicotine addiction in the world’s largest tobacco consumer and producer, the World Health Organization chief said.

WHO Director-General Margaret Chan called for more taxes on Wednesday after awarding Health Minister Chen Zhu a certificate in recognition of his efforts to combat smoking.

World Health Organization Director-General Margaret Chan (right) gives the certificate and medal of the Director-General’s Special Recognition of Contribution to Global Tobacco Control to Chen Zhu, the minister of health, in Beijing on Wednesday. WeiXiaohao / China Daily

“There is still plenty of room for China to raise its tobacco tax and the government should take more action regarding this to help curb smoking,” she told China Daily.

“Evidence shows that higher taxes deter people, especially the young, from smoking,” she said.

International studies indicate that for every 1 percent rise in the price of a packet of cigarettes, the number of smokers falls by about 0.4 percent, she said.

“Every time I have come to China and had the opportunity of speaking to Chinese leaders, I encouraged them to raise tobacco tax,” she added.

There is a huge financial cost in treating tobacco-related diseases, Chan said.

China has 350 million smokers, more than one-third of the world’s total, and at least 1 million people die from smoking-related diseases each year, according to the ministry. By 2020, the figure for fatalities is expected to reach 2 million without effective intervention.

Government agencies, like the ministries of health and education, have introduced policies such as smoke-free hospitals and schools, as well as smoking bans at most public indoor places. Tobacco products have also been targeted with tax hikes.

In 2009, authorities increased tobacco tax by at least 6 percent, mostly on the more expensive brands.

“But that had little effect on curbing tobacco use, particularly the low-end brands,” said Yang Gonghuan, former director of the tobacco control office under the Chinese Center for Disease Control and Prevention.

Tobacco tax, even after the hike, remained very low on a global scale.

“Countries are looking at how to increase tobacco tax and China should also raise the tax according to its own circumstances,” Chan said.

China signed the WHO Framework Convention on Tobacco Control and ratified it in 2005.

The campaign to combat nicotine addiction falls under the Ministry of Industry and Information Technology, which also oversees the State Tobacco Monopoly Bureau, often referred to as the China National Tobacco Corp.

Chan suggested that implementation of the WHO framework should be led by the Ministry of Health instead.

“I would confer an award to the Ministry of Industry and Information Technology to encourage them,” she said.

Vice-Premier Li Keqiang also met Chan in Beijing on Wednesday.

Li congratulated Chan on her second term as director-general of WHO, which was announced in May.

Chan spoke highly of China’s progress in medical reform, which, among other things, saw medical insurance coverage rise from 30 percent to 95 percent for residents in the past five years.

Contact the writers at and

Copyright By All rights reserved

apply this to the tobacco ceo’s

Hong Kong (HKSAR) – A man aged 50 and his wife aged 57 were respectively jailed for 42 and 51 months for ‘money laundering’ at District Court today (July 19).

The Court heard that the duo had accepted bets on local horse racing and global soccer matches, and a number of large amounts were deposited into their bank accounts from 2004 to 2010.

The Regional Crime Unit of New Territories North conducted in-depth investigations and arrested the man at Lo Wu Border Control Point on May 23, 2011 when he returned to Hong Kong from the Mainland. About HK$180,000 and RMB$12,000 cash were found in his possessions. Police also seized some cash and valuables worth about HK$800,000 at his residence and arrested the female defendant.

Investigations revealed that the duo used two and five bank accounts respectively for dealing with crime proceeds about HK$39 million and HK$23 million.

About HK$10 million of the couple’s assets were restrained. Police would apply to the court to confiscate crime proceeds in accordance with the Organized and Serious Crimes Ordinance (Chapter 455).

Both defendants were subsequently charged with respectively two and five counts of ‘dealing with property known or believed to represent proceeds of an indictable offence’. The male pleaded guilty earlier while the female was convicted after trial.

Sentences were handed down today.

Police Report No. 244
Issued by PPRB HK Police

Customs smashes syndicate using cross-boundary private cars to smuggle illicit cigarettes

Hong Kong (HKSAR) – Hong Kong Customs yesterday (July 17) smashed a syndicate using cross-boundary private cars to smuggle illicit cigarettes. A total of 74,200 sticks of illicit cigarettes were seized and three men aged from 24 to 30 were arrested. Six private cars involved in the smuggling, storage and distribution of the illicit cigarettes were also seized.

After a series of investigations, Customs’ Revenue and General Investigation Bureau officers discovered a syndicate frequently using cross-boundary private cars to smuggle illicit cigarettes into Hong Kong from the Mainland. The illicit cigarettes were then delivered to carparks in Tin Shui Wai for temporary storage in the private cars pending collection and distribution by other vehicles.

The Customs officers mounted an operation yesterday and raided three cross-boundary private cars at Tin Shui Wai and Lok Ma Chau Control Point. Two private cars for storage and another one for collection and distribution were also seized.

During the operation, a total of 74,200 sticks of cigarettes were seized with a total value of about $740,650 and a duty potential of $126,600.

Three men were arrested.

A Customs spokesman said today (July 18) that the department will continue to closely monitor the situation and conduct stringent enforcement actions against illicit cigarette activities.

Under the Dutiable Commodities Ordinance, anyone involved in dealing with, possession, selling and buying illicit cigarettes commits an offence. The maximum penalty is a fine of $1 million and imprisonment for two years.

Members of the public are urged to report any suspected illicit cigarette activities to the Customs’ 24-hour hotline  2545 6182.

Source: HKSAR Government

Big Tobacco in US Targeting Youth in Indonesia?

Description: PHOTO: Two-year-old Chairul likes to light up right after a nap. His grandfather says he allows Chairul to smoke because it tastes good, "like bread with chocolate."

Two-year-old Chairul likes to light up right after a nap. His grandfather says he allows Chairul to smoke because it tastes good, “like bread with chocolate.” (Jon Meyersohn/ABC News)

– / +

By DAN HARRIS (@danbharris) and CHRIS KILMER

July 10, 2012

Indonesia is home to the chubby YouTube superstar known as the “smoking baby”, whose chain-smoking antics have racked up over 17.5 million views. But while many may be tempted to write this off as another passing fascination, the “smoking baby” actually represents just the tip of the iceberg of an astonishing, global epidemic of youth smoking.

A year-long ABC News investigation examined the tobacco industry’s expansion into Indonesia, which critics say is being fueled, in part, by one of the most powerful and profitable corporations in the United States.

Indonesia, the world’s fourth-largest country, has an enormous, thriving tobacco market and very few regulations on the sale and consumption of cigarettes. One company in particular, Philip Morris International (PMI), has found tremendous success in Indonesia, making millions selling Marlboros and popular local brands.

PMI can market their products to young people there in ways they could never do in the U.S. or Europe, where government agencies clamped down on tobacco advertising to youth over 40 years ago. In Indonesia, cigarette ads are abundant on television, and billboards even feature the iconic Marlboro Man, whom Philip Morris, under public pressure, laid to rest in the U.S. in 1999.

Jon Meyersohn/ABC News

Two-year-old Chairul likes to light up right… View Full Size

Jon Meyersohn/ABC News

Two-year-old Chairul likes to light up right after a nap. His grandfather says he allows Chairul to smoke because it tastes good, “like bread with chocolate.”

‘Smoking Baby’ Kicks the Habit Watch Video

Dangerous Medicine? Smoke on Boy’s Skin Watch Video

FDA Picks Graphic Labels for Cigarettes Watch Video

ABC News first reported on this issue last September and PMI has repeatedly denied requests for interviews. So ABC News confronted PMI’s CEO Louis Camilleri at the company’s annual shareholder meeting in New York City in June and showed him a photo of a Marlboro-branded kiosk located near a school in the capital city Jakarta that ABC News had previously reported on.

Camilleri said PMI had attempted to locate the kiosk after ABC News broadcast its first investigation, but said the company was unable to locate it. Camilleri also defended his company’s efforts to reduce their products’ exposure to children in Indonesia.

During an attempt to interview Camilleri on camera after the shareholder meeting, he admitted that in Indonesia, “there are marketing freedoms that we don’t have in a number of other places, and we need to compete.” When asked if he is comfortable with the way PMI does business in Indonesia today, Camilleri said, “I think we’re doing the most responsible thing in Indonesia and that we’ve been very vocal advocates for restrictions.”

Despite those claims, “there has been no fundamental change in the fact that PMI and other tobacco companies continue to advertise every place they are allowed throughout Indonesia,” according to Matthew L. Myers, president of Campaign for Tobacco Free Kids in Washington, D.C.

“Indonesia was a tobacco industry playground, and today, sadly, Indonesia remains an industry playground,” he said.

In 2008, Altria, the parent company of Philip Morris USA, spun off its international operations and became PMI. Today, PMI is the leading international tobacco company, with tobacco products sold in approximately 180 countries. According to its annual report, PMI’s 2011 net revenues were $31.1 billion, up over 14 percent from 2010. PMI also reported a net income of $8.5 billion, a 18.3 percent increase over 2010.

In 2005, PMI had acquired Indonesia’s third largest tobacco company, Sampoerna. Selling a mix of Philip Morris brands and popular Sampoerna brands, PMI is now the number one tobacco company in Indonesia, controlling an estimated 30 percent of the market. According to the company’s annual report, PMI’s business in Indonesia accounts for 9.4 percent of its 2011 profits, up 25 percent over 2010.

PMI has claimed that it does not intentionally market to Indonesian youth, but in the years following PMI’s entry into the Indonesian market, government statistics show youth smoking rates there have nearly doubled.

In this wild west environment, children face almost no obstacle to purchasing cigarettes. In Jakarta, where tobacco ads were plastered on billboards, ABC News witnessed an 8-year-old girl buying tobacco from a vendor in a busy public market.

‘Smoking Baby’ Kicks the Habit Watch Video

Dangerous Medicine? Smoke on Boy’s Skin Watch Video

FDA Picks Graphic Labels for Cigarettes Watch Video

In tiny Palembang, a remote fishing village in Eastern Java, an elderly man freely admitted that he introduced smoking to his grandson, Chairul, when he was barely of grade-school age. “It’s all right,” the man said, “as long as he drinks enough coffee with his cigarettes.”

Not far from where Chairul lives, we found the original “smoking baby,” whose name is Aldi Rizal. His mother said she never wanted him to pick up smoking, but that his withdrawal-fueled tantrums were too difficult to endure.


Photo of the Marlboro-branded kiosk located near a school in the capital city Jakarta before the brand logos were taken down. Credit: Chris Kilmer/ABC

Tobacco Bonds Face Default as Smoking Declines, Moody’s Says

Tobacco Bonds Face Default as Smoking Declines, Moody’s Says

‎Bloomberg – 5 days ago

The declining number of U.S. smokers is proving hazardous to the health of municipal bonds backed by payments from cigarette companies 

Tobacco Bonds May Be Doomed to Default‎ Barron’s (blog)
Most US muni tobacco bonds will default – Moody’s‎ Reuters
Tobacco Bonds Could Go Up in Smoke, Moody’s Says‎ Wall Street Journal (blog

Tobacco company award ‘oversight’ – Helen Clark

Description: Helen Clark says her involvement in giving a business award to a tobacco company won't be happening again.  Photo / Listener

Helen Clark says her involvement in giving a business award to a tobacco company won’t be happening again. Photo / Listener

Former New Zealand Prime Minister Helen Clark says it was a “serious oversight” a cigarette company was able to win a World Business Development Award, which are supported by the UN agency she heads.

Clark, now the head of the United Nations Development Programme, has been slammed for presenting ITC, India’s largest cigarette maker, with a World Business Development Award late last night.

The company received the World Business Council for Sustainable Development’s highest prize for improving the environment and removing poverty.

In a statement, Ms Clark said she was shocked to learn ITC – formerly the Indian Tobacco Company – had been given an award.

“I have worked tirelessly throughout my career to achieve a smoke free society in New Zealand, and was thus, shocked to learn that a World Business Development Award, supported by UNDP, was given to a company which derives a substantial proportion of its profits from tobacco,” she said.

“Unfortunately the criteria for the World Business Development Awards did not exclude projects implemented by companies from certain sectors like tobacco.

“This has clearly been a serious oversight.

“UNDP is reviewing its rules and regulations to ensure that an incident like this never happens again. UNDP will not participate in these awards in the future unless companies like this are excluded.

“I retain my strong commitment to anti-tobacco policies and will continue to fight for the health and well-being of citizens in New Zealand and around the world.”

Columnist Pranay Lal, writing for India’s Daily News and Analysis, described the award as a “travesty of justice”.

“It [ITC] needs to clear forests and fields to grow tobacco, requires chemicals to ensure that the tobacco plant is free of pathogens, and trees to be hacked to cure the tobacco (one kilogram of tobacco needs roughly eight kilos of dry fuel wood), add more than 4000 undisclosed chemicals to make the cigarette addictive, and top this with glossy packaging of paper, cardboard and plastic, which we see littered on the streets and choking waterways.

“In addition, ITC’s factories have over-extracted water and polluted rivers,” Lal wrote.

“What is tragic is that Helen Clark, a responsible prime minister and wife of a respected public health expert could not have given this award in New Zealand or any other developed country.”

By Paul Harper

Copyright ©2012, APN Holdings NZ Limited

US free market group tries to halt sales of cigarettes in plain packets in UK

Description: tobacco shop display

US lobby group Alec wants to stop plans to sell cigarettes in plain packets. Photograph: Oli Scarff/Getty

A powerful US lobbying group that bankrolls climate change sceptics and leading members of the Tea Party ismobilising British opposition against plans to sell cigarettes in plain packs.

As the UK government considers the proposals, it has emerged the American Legislative Exchange Council (Alec), an organisation sponsored by big tobacco and other corporate interests, is playing a key role in trying to scupper them.

Supporters of the plans say they will deter young people from smoking. But opponents say there is little evidence this is the case and warn that generic packs will encourage counterfeiting.

Alec, which is heavily supported by Charles and David Koch, the billionaire oil baron brothers, has launched a sophisticated global lobbying campaign against the plan.

Alec, which proclaims its “belief in the power of free markets and limited government to propel economic growth”, has warned countries looking to impose plain packaging that they will be violating intellectual property provisions laid down by the World Trade Organisation, opening themselves to legal challenges.

It is targeting the UK, where the government has recently pushed the deadline for its consultation on plain packaging back by a month until the end of August as lobby groups on both sides of the debate make their submissions.

Karla Jones, Alec’s taskforce director, briefed members of its international taskforce at a luxury retreat that such a move threatened major business interests. Jones told those attending: “Among the countries considering plain packaging bills are Canada, the UK and Australia, and if passed, plain packaging regulations could effectively deprive corporations of what is often their most valuable asset, their brand, trademark and/or logo.”

Alec has also written to the Australian government, which intends to introduce plain packaging later this year, saying 2,000 state legislators, representing all 50 US states, “as well as 101 congressional alumni and over 250 companies and public policy associations” oppose the plan.

The organisation is seeking to convince politicians that the move would increase smoking. Alec warns in a submission to governments considering the plan: “Studies have shown that increased availability of generic cigarettes drives up cigarette consumption. As would be expected from their price, generic cigarettes appeal most to the poor, elderly and most dependent smokers. This proposal, then, will exploit those who can least afford to smoke and those who suffer most from smoking.”

Alec also persuaded politicians from around the world to back a trade resolution attacking the European Union ban onsnus, a moist smokeless tobacco product that comes in fruit flavours and is targeted at younger consumers.

The organisation’s attempts to influence the debate outside its native US has angered health campaigners. “Alec’s free-market rhetoric may work in the US but it won’t wash here in the UK,” said Deborah Arnott, chief executive of Action on Smoking and Health (Ash). “The tobacco industry and its lobbyists have money to burn, and they might as well just set fire to it as their campaign against plain packs is going nowhere. Their legal case is weak and the evidence in support of plain packaging is strong.”

Losing their brand identity would be a blow for cigarette companies, which are fighting the proposal tooth and nail.

British American Tobacco, Imperial Tobacco and Philip Morris, a major supporter of Alec, have launched high court challenges against the Australian laws, saying they infringe trademark rights. The tobacco companies have placed a series of adverts in the British media, including the Observer.

In recent months, concerns about some of Alec’s activities have seen a number of its high-profile corporate sponsors resign their membership. The exodus has thrust the Koch brothers into the limelight. The two are reputed to bankroll the Tea Party via a series of trusts, although both deny attending any of its events. According to Greenpeace USA, the Koch brothers have channelled almost $62m (£40m) “to climate change-denial front groups that are working to delay policies and regulations aimed at stopping global warming”.

Alec has enjoyed close links with the Atlantic Bridge, the defunct charity chaired by former Tory defence secretary Liam Fox, which sought to foster links between conservatives on both sides of the Atlantic. It was dismantled last year after criticism from the Charity Commission of its aims and operations.

Alec did not return calls