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December 13th, 2016:

Do the right thing: Tax tobacco!

Both my grandfathers smoked when they were young. My father’s father was a shopkeeper who smoked a pipe and my mother’s father was a smallholder who smoked cigarettes. Both died of heart failure and left my grandmothers as widows. My father grew up as a little boy in an atmosphere of pipe smoke and sometimes I wonder whether this contributed to his asthma and his own heart problems. My mother became a doctor, a cancer specialist, and she always used to tell my brother and me that we should never smoke, because she saw every day what smoking had done to her patients.

In Moldova, 87 percent of deaths are attributable to diseases associated with tobacco. I am not saying that tobacco caused them all, but these deaths are caused by diseases to which tobacco contributes. Also, in Moldova 43 percent of men smoke, while for women it is 5 percent. The worry is that nowadays a lot of the growth in smoking is among women.

It’s interesting that very many Moldovans begin to smoke when they are children. 30 percent of kids in class 8 or class 9 have already smoked a cigarette. And this is possible because smoking is so easy. It’s so cheap. It’s cheaper than buying a bottle of Coke or a chocolate bar. So obviously smoking is very attractive to young people in Moldova. We can discourage young people from beginning this dangerous and addictive habit by making cigarettes more expensive.

Smoking eats up 5 to 10 percent of the public health budget. That’s our estimate of the cost of treating diseases caused by smoking. The World Bank has looked at many scenarios of how raising tobacco taxes would increase Government revenues. Without going into details, it’s quite possible to raise at least an extra 1 percent of GDP.

So raising tobacco taxes could protect the lives of our children and grandchildren, save on health spending and raise revenues.

If somebody votes against increasing tobacco taxes, it could be for three reasons. Two of them are wrong. Only the third one is solid.

The first one is a fear that there might be political resistance to an increase in taxes. But anybody who opposes tobacco taxation for fear of the political resistance has to answer this question: “Can you find another way to improve the budget by at least one percent of GDP which would create less political resistance?” One could raise VAT or income tax, but that would be politically even more difficult than increasing tax on tobacco.

The second reason for opposition to an increase in tobacco taxes would be for fear of smuggling. We know about smuggling. We know how cigarettes enter Moldova through Transnistria. Maybe two or three years ago this argument would have been convincing. But now, Moldova and Ukraine have made significant progress in border cooperation and have monitoring systems which make this business much more difficult – if there is political will.

There is only one strong reason for opposing an increase in tobacco taxation. And that is because one is influenced by the tobacco lobby. The only real source of resistance to an increase in tobacco taxation is the tobacco industry. I therefore think that it is the obligation of anyone who blocks an increase in tobacco taxation to explain to the population why they are so opposed to it.

From a speech by Alex Kremer, World Bank Country Manager for Moldova, at Moldova’s parliament on 6 December 2016.

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