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December 5th, 2015:

Proposal of 40% GST on aerated drinks, tobacco could severely hit both sectors

NEW DELHI| KOLKATA: Consumer prices of aerated drinks will rise as much as 20% and their sales will take a hit in case the government goes ahead with a proposal to levy a steep 40% goods and services tax (GST) on such beverages, two top industry officials said.

Acommittee headed by chief economic advisor Arvind Subramanian, on Friday recommended 40% “sin/demerit” GST for luxury cars, aerated beverages, paan masala, tobacco and tobacco products. This has alarmed officials in both aerated drinks and tobacco companies. “If this proposal goes through, it will kill the beverage industry,” said a top industry official, pointing out that the industry is already struggling with low single digit or negative growth. “It’s really unfair to club soft drinks with tobacco and tobacco products,” the person added.

Existing excise duty levied on the Rs 14,000-crore soft drink industry, comprising mainly of Coca-Cola and PepsiCo, is 18%. Tobacco industry officials said 40% GST would further increase the consumption of lightly taxed or tax-evaded tobacco products such as bidi, khaini, chewing tobacco, gutkha and illegal cigarettes, which already constitute over 89% of total tobacco consumption in India. The legal cigarette industry in India is already hit hard by recurrent increase in excise duty by the government.

This includes a cumulative increase of 115% on the entry level sub-65 mm length cigarettes. In the last three years, excise and VAT on cigarettes at per unit level has gone up cumulatively by 98% and 124%, respectively. As a result, cigarette sales volume are down by more than 15% for the last three quarters, a senior industry official said. The proposed GST rate if implemented will further impact sales of legal cigarettes and will trigger consumption to other forms of tobacco.

Already, India is the fourth largest market for illegal cigarettes in the world, according to a study by Euromonitor International.

The beverages industry official quoted earlier said high GST would impact established players because local unorganised players could sell at half the price. This could compromise quality as well, the person said. Slowing category sales and unseasonal rains have severely impacted soft drinks sales this year. In the last Union budget, finance minister Arun Jaitley had levied 5% excise on aerated sugary drinks.


Tobacco giants and Government in plain packaging showdown

British American Tobacco and Imperial Tobacco will line up against the Government

The world’s biggest tobacco companies will this week start their High Court battle with the Government over plans to sell cigarettes in plain packets, a controversial law that the manufacturers argue deprives them of their property rights.

FTSE 100 companies British American Tobacco and Imperial Tobacco, along with Marlboro maker Philip Morris International and Japan Tobacco, will line up against the Government on Thursday, when a six-day hearing will start.

The firms are not claiming compensation or costs, but if they succeed in scrapping the ban they could receive large payouts.

Although the companies originally lodged papers separately, their bids to have plain packaging ruled illegal will be heard as one case. The new law is due to come into force in May next year.

The four cigarette companies are co-operating with each other so that each one will present a different argument against the legislation on standardised packets.

Mr Justice Green will hear the case, with a decision expected by January. Whatever the outcome of the hearing, the side that loses will almost certainly appeal.

MPs voted to ban brands and logos on cigarette packets in March, becoming only the third country in the world to do so after Australia and Ireland.

The Government hopes the measures will make smoking less appealing, particularly to youths.

The tobacco companies, however, argue that the measures are unlawful. They believe plain packaging breaches European Union law on community trademarks and that they have been deprived of their valuable brands without compensation.

The firms will also argue that the introduction of plain packaging in Australia, in December 2012, did not lead to a reduction in smoking, although the Government is expected to counter by saying that it is too early to judge the impact of that ban.

In a separate case in Luxembourg, the manufacturers are also attempting to prove that the plain packaging measure in the UK exceeds the EU Second Tobacco Products Directive.

The advocate general will issue an opinion on the matter in less than three weeks, with a ruling to follow early next year. The outcome of the High Court battle will become irrelevant should the tobacco companies win in the EU, because they will have proven that the UK had no legal right to introduce plain packaging.

It is hoped that, even in the event of an appeal, the matter will have been decided one way or another before plain packaging is introduced in May.

If that looks unlikely, the companies are expected to try to delay the start of the ban.

Dangerous Molecules Discovered in E-Cigarette Aerosols

Researchers at Penn State College of Medicine says they have found that electronic cigarettes produce free radicals, which are molecules that cause cell damage and can lead to cancer.

E-cigarettes will soon fall under the same rules as normal cigarettes – not for sale to persons under the age of 18 and restrictions on advertising, RTL Nieuws reports.

Instead of burning tobacco, e-cigarettes work by delivering nicotine in the form of water vapor, giving users an alternative to the many unsafe byproducts of burning tobacco.

Electronic cigarettes are often thought to be safer than cigarettes because they don’t produce smoke or contain the tar and chemical of tobacco.

Commenting on the potential dangers of e-cigarettes, John P. Richie Jr., Professor of Public Health Sciences and Pharmacology at Penn State College of Medicine said, “There’s a perception that e-cigarettes are healthier than regular cigarettes, or at least not as harmful as regular cigarettes”.

“While e-cigarette vapour does not contain numerous toxic substances that are known to be present in cigarette smoke, it’s still important for us to figure out and to minimize the potential dangers that are associated with e-cigarettes”, he said in a statement.

To model the possible harmful effect of e-cigarette vapor, which contains among other things nicotine and flavorings, British American Tobacco partnered with tissue engineering firm MatTek to use a smoking robot with respiratory tissue.

Previous studies have found low levels of aldehydes, which are chemical compounds that can cause oxidative stress and cell damage, in e-cigarette vapor. However, no-one has paid attention to the ‘free radicals’ that can also potentially be produced by e-cigs – even though these are considered to be the primary reason for smoking-related cancer, cardiovascular disease and chronic obstructive pulmonary disease.

“This is the first study that demonstrates the fact that we have these highly reactive agents in e-cigarette aerosols”, Richie said. The researchers measured free radicals in e-cigarette aerosols. Results were published in the journal Chemical Research in Toxicology.

Further research is needed to determine the health effects of highly reactive free radicals from e-cigarettes.

Richie says there’s a perception that e-cigarettes are healthier than regular cigarettes, but his team’s findings suggest the devices may not be free from harm. They are potentially harmful.

Researchers are hoping to eventually measure total numbers in e-cigarette aerosols in order to see how exactly these may impact human health.

National Institute on Drug Abuse of the National Institutes of Health and the Center for Tobacco Products of the U.S. Food and Drug Administration funded this research

Health Minister, Dr. Rajitha Senaratne receives the World No Tobacco Day Award 2015

The World Health Organization (WHO) has selected Minister of Health Dr. Rajitha Senaratne as the recipient of the World No Tobacco Day Award for 2015.

The World Health Organization (WHO) has selected Minister of Health Dr. Rajitha Senaratne as the recipient of the World No Tobacco Day Award for 2015.

The “World No Tobacco Day” is observed on May 31st every year, under various tobacco related themes.

The objective of doing so is to encourage a 24 hour period of abstinence from tobacco consumption throughout the world.

Another aim of this initiative is to make the public aware about the extensive prevalence of tobacco consumption, the health hazards it poses and encourage people to quit using tobacco.

On this day the World Health Organization (WHO) recognizes individuals or organizations from the six WHO Regions for their accomplishments in the field of tobacco control.

The WHO specifically mentions Dr.Senaratne’s role in advancing the introduction of pictorial health warnings on the cigarette packs and the effort to get the court approval for this purpose. It also recognizes the professional life long work done by the Hon. Minister in mitigating the ill effects of tobacco, particularly smokeless tobacco. Even as a student in Dental Sciences, he was in the forefront of the fight against tobacco use which is the main reason for cancers and many other diseases. Later he carried this interest into his professional and political life as well. This year the Health Minister has been chosen as the recipient of this prestigious award to both honour and recognize his untiring efforts towards tobacco control.

This award will be presented to the Minister of Health Dr. Rajitha Senaratne by the President Maithripala Sirisena on 7th December 2015.

The Chairman of the National Authority, Dr. Palitha Abeykoon, stated that Sri Lanka has made tremendous progress in their battle against tobacco during recent past years and this year the implementation of the regulation on pictorial health warnings (PHWs) took place with coverage of 80 percent on cigarette packets effective from 1st of July, 2015.

This became a reality largely due to the efforts of His Excellency, the President Maithripala Sirisena who stood firm on this matter for many years. Last year he was bestowed with the World No Tobacco Day award, in recognition of his untiring efforts to realize the above as the then Minister of Health.

Dr. Abeykoon stated; “While congratulating the Health Minister, we would like to draw his attention to many other key issues that Sri Lanka should achieve in the near future to eradicate tobacco consumption from Sri Lanka.

These include, the adoption of a solid tobacco taxation policy, strengthening of anti tobacco laws, establishing smoking ban “at all public places”, monitoring of direct and indirect advertising and banning corporate social responsibility initiatives, encouraging and educating children to refrain from taking up smoking, extending help for those who wish to quit.”

Dr. Abeykoon suggests that the government should take measures to protect the children and make them strong enough to resist peer pressure and other media pressures which are intended to entice them to use tobacco, alcohol and other drugs.

“We specifically draw the attention of Hon. Minister of Health to implement Article 16 of the FCTC of the WHO (sales to any by minors) which obligates Parties to the Treaty to implement this important Article and reduce affordability of cigarettes to minors and prevent non using youth from experimenting to smoking, by prohibiting the sale of single stick sales or small cigarette packages in Sri Lanka. Banning of single stick and mini pack sales are also important to make the PHW implementation more comprehensive.” requests Dr. Abeykoon.

Currently 6 million deaths occur worldwide, including 600000 deaths caused due to passive smoking.

The World Health Organization Framework Convention on Tobacco Control (FCTC) which is one of the most widely adopted treaties in the United Nations system entered into force in 2005, to reduce the devastating global consequences of tobacco products on health, lives and economies.

The FCTC is a legally binding treaty that requires countries bound by the treaty or Parties to implement evidence based measures to reduce tobacco use and exposure to tobacco smoke.

Currently there are 180 Parties to the FCTC as of March 2015.

The FCTC provides a broad framework of obligations and rights for Parties to implement various tobacco control measures. The Parties to the FCTC have adopted various implementing guidelines to provide effective implementation of the treaty.

Since 2005, more than 40 countries have enacted or implemented strong smoke-free legislation across the globe, including all sub-national jurisdictions in Australia and Canada.

In Latin America, 16 countries have passed strong smoke-free legislation, including Brazil, the most populous country in the world to enact 100 percent smoke-free legislation.

Since 2005, more than 75 countries have enacted or implemented graphic warning labels that cover at least 30 percent of tobacco packaging.

At least 24 countries are classified by the World Health Organization as having passed complete tobacco advertising, promotion and sponsorship bans.

Non-communicable diseases (NCDs) including cancer, heart disease, chronic lung disease and diabetes have overtaken infectious diseases as the leading killers in the world. Of the deaths that occur worldwide, nearly two out of every three are due to NCDs. Of them eighty percent deaths occur in low and middle income countries.

Tobacco use is the only risk factor shared by all four main categories of NCDs. Tobacco is responsible for nearly one in six deaths from NCDs and kills nearly six million people worldwide, every year.

Therefore at the UN High Level Meeting on NCDs, world leaders made an unprecedented commitment to address the global health crisis caused by NCDs and recognized that the battle against NCDs cannot be won with winning the fight against tobacco.

In 2010, the first Global Status Report of WHO on NCD recommended 10 ‘best buys’ , viz. cost effective actions that governments should undertake immediately to prevent NCDs, save lives and reduce health care costs. Of them four are proven tobacco control policies contained in the FCTC.

* Protect people from secondhand smoke and ban smoking in public places;
* Warn about the dangers of tobacco use.
* Enforce bans on tobacco advertising, promotion and sponsorship; and
* Raise taxes on tobacco.

It is expected that implementation of FCTC policies would prevent 5.5 million deaths over 10 years in 23 low and middle income countries with a high burden of NCDs and cost less than 20 cents per person per year in countries such as China and India.

– Asian Tribune