Smoking gun that is the tobacco industry

Surprisingly, increases in cigarette prices in SA have remained below inflation.

As the world observed World No Tobacco Day late last month, South Africans were reminded that tobacco and tobacco use continues to be a threat to development.

The effects range from deforestation to sick days off work; from child labour in farming to child addiction; and from pollution to disease, disability and death.

In all areas, tobacco impedes development, causes pollution and waste and harms nature and our environment. In addition, it provides excessive profits for the industry and causes huge, preventable, healthcare costs.

Paul Hancock, director: finance, of the TAG (Tobacco, Alcohol and Gambling Advisory, Advocacy and Action Group) says: “In February 2017, the minister of finance increased the tax on tobacco products to 8%, above the rate of inflation, by increasing the tax on a pack of 20 cigarettes by R1.06 from R13.24 to R14.30.

“That was an outstanding move and an improved strategy in trying to curb the consumption of tobacco products. While the tax on tobacco reflects this increase, it would appear as though retail prices of cigarettes have not increased by such an amount and thus the consumer is not feeling the full brunt of the tax increase.”

Iraj Abedian, former professor of economics at the University of Cape Town and a member of TAG’s experts advisory panel, adds: “It is most important that tax is used as a tool to increase the retail price of tobacco products. The ‘cost to consumer’ must increase consistently beyond inflation in order to make cigarettes less affordable, thereby reducing both consumption and prevalence.”

However, a review of retail prices of cigarettes shows that cigarette prices have not increased significantly, but they have increased industry profits.

The average increase in the retail price is about 5.5%, which is below inflation, which last year was approximately 6%. On average, cigarettes have become cheaper and more affordable while industry profits increase.

At the same time, there is no incentive for smokers to quit because of the cost.

There is no disincentive for the youth to start smoking. Several of the cheaper brands have absorbed the tax increase and have become 6% cheaper than last year. This will undoubtedly result in the recruiting of more youth into a lifelong addiction for most.