TOBACCO SMUGGLING: THE BUTT STOPS HERE
Tobacco is the only legally available consumer product that kills half its users when used as directed. It kills one person every six seconds, with an average tobacco-user losing seven to eight years prematurely, shows World Health Organisation (WHO) data.
Close to 6 million people die of tobacco use each year, of which 600,000 are nonsmokers who die from inhaling secondhand smoke. In India, 1 million people die of smoking-related diseases each year, with the national obsession with chewing tobacco – more than one in four adults chew tobacco – making India top the world‘s oral cancer list, including cancers of the mouth, voice-box and windpipe.
Despite bans on advertising, sale to minors and smoking in public places, more than one in three adults smoke or chew tobacco in India.
Raising taxes and the warning size on packs increases illicit trade, including smuggling and illegal manufacturing, which moves consumption from licit to illicit products, argues the Tobacco Institute of India (TII), which represents manufacturers, farmers, exporters and ancillaries of the cigarette industry. India is now the fifth-largest market for illegal cigarettes in the world, according to Euromonitor International. According to the TII, fakes and smuggled goods now account for one in five cigarettes sold in India, resulting in a revenue loss of more than Rs 7,000 crore.
The argument is partly true. There’s evidence that smuggling and fakes are flooding the market. There’s been a four-fold increase in the value of seizures of smuggled cigarettes in 2014 as compared to 2012, show data from the Directorate of Revenue Intelligence. As a result of smuggling alone, India lost import duty worth Rs 2,363 crore in 2014-15, with most smuggled cigarettes coming from Korea, Indonesia, Malaysia, Singapore, Dubai, China and the UAE.
Also, since smuggled products and fakes are not subject to quality control and often do not conform to national health regulations, such as pack warnings and sale to minors, they undermine tax regimes and public health policies.
This does not mean governments need to lower tax or dilute health initiatives. Instead, what’s needed is a crackdown on illegal manufacture and sale.
France tripled its inflation-adjusted cigarette prices between the 1990s and 2005, which halved cigarette sales in a little over a decade. Despite the open borders within Europe and threats of smuggling, death from lung cancer went down by 50% during the same period.
Hard-hitting anti-tobacco advertisements and pictorial pack warnings are known to keep children and teenagers away from tobacco and make users want to quit, yet the Health Ministry controversially deferred its decision to increase the size of pictorial health warnings to cover 85% of the pack on both sides – up from the current 40% on one side -- from April 1 on the recommendations of a Parliamentary Committee with members with conflicts of interest, such as beedi baron and BJP MP Shyam Charan Gupta. India has one of the world’s weakest pack warnings. According to a 2014 report by the Canadian Cancer Society, India is ranked 136th among 198 countries listed on the size of their tobacco warnings. In Asia, with similar tobacco use patterns, warnings cover 85% of packages on both sides in Thailand, 90% in Sri Lanka and 75% in Nepal.
Raising taxes on tobacco – enough to increase tobacco price above inflation rates – is the most cost-effective way of lowering consumption. If all countries increased taxes by 50%, there would be 49 million fewer tobacco smokers (38 million adult users, 11 million future smokers), which would prevent 11 million deaths, according to WHO.
On average, raising taxes by 10% lowers use by 4% in high-income countries and by 5% in low- and middle-income countries, show WHO data. Cigarette sales in Egypt dropped by 14% within two years after takes were substantially raised in 2010.
In 2012, the Philippines introduced a “Sin Tax” on tobacco and alcohol in the face of strong industry opposition, cigarette volume removals from tobacco manufacturing dropped by 15.5% within a year, from 5.8 million in 2012 to 4.9 million packs in 2013.
Quitting tobacco use has immediate and long-term benefits, with former smokers have the same health risks as non-smokers within 15 years. Now that we know, it’s time to do something about it.