Law may stub out smoking – and jobs

THE DEBATE on the health effects of tobacco products and the socio-economic impact of the proposed legislation and illicit trade is an important one. But for a country faced with high levels of unemployment, the pursuit of meeting health objectives should not be at the expense of jobs.

In his opinion piece (The Star, August15), Health Minister Aaron Motsoaledi makes insinuations that workers in the tobacco value-chain and their union, Fawu (Food and Allied Workers Union), are been lied to on the impact of job losses, but goes on to argue that health benefits cannot be juxtaposed with job losses.

He suggests that there is no illicit trade in cigarettes and that tobacco laws, which were amended from the days of Minister Nkosazana Dlamini Zuma, did not result in the growth of the illicit trade market. But he is yet to contest the findings of a study by market research firm Ipsos, which found that the pene- tration of illicit tobacco products in the informal sector had reached alarming levels and that R7 billion is lost to the fiscus due to illicit trade.

There are two issues about tobacco that Motsoaledi should appreciate.

First, the amendments to tobacco legislation contain draconian provisions and even those that appear to have been made in good faith are not practical.

Second, the illicit trade of cigarettes exists and, due to this, the numbers of people who smoke may have not gone down, despite the high levels of “sin” taxes to the legitimate sector.

The proposed Control of Tobacco Products and Electronic Delivery Systems Bill, aimed at replacing the old Tobacco Control Act, introduces regulations that will now ban smoking in all public spaces, including outdoors, within 10m of another person.

The bill will also remove branding from cigarette packs, put a ban on the display of tobacco products by retailers and introduce jail time for those found to be in contravention.

On the proposed amendments, minister should note the following.

First, on expanded public space, 10m will negatively affect taverns in the congested townships as smokers may have to go to the outskirts of the township to smoke. The provision that allows for non-smoking passengers in a car to suffer inhalation of smoking just because they are older than 12 defeats the purpose of saving non-smokers.

Second, the ban on the display of tobacco products at retail spaces will severely hit the pockets of formal and informal traders.

On the bill’s intent to introduce plain packaging, we believe putting graphic content on cigarette packs to show the health effects of smoking would be the most effective way of deterring non-smokers from taking up smoking and “incentivising” smokers to quit.

Plain packaging will only translate to job losses for those responsible for branding and create a further opportunity for illicit traders to flourish as consumers will have the brand awareness aspect taken away from them.

On illicit trade, the minister ought to be honest with the proliferated sales of illegally manufactured cigarettes at the informal trading spaces in villages and townships. He must explain why, if there is no illicit trade, a packet of 20 cigarettes can be sold for as little as R10, as I established at the Meadowlands township of Soweto one weekend.

A legitimate cigarette packet has a retail price that includes VAT and excise duty tax that amounts to R17.85 and, according to the Ipsos study, any packet that retails below this price is deemed illicit.

The minister may have to contest the Ipsos research report which suggests that up to R7bn is lost in revenue to the fiscus due to unpaid taxes on 2 billion sticks estimated to be illicitly trading in the country. This is because illicit trade presupposes under-declaring volumes and paying little tax and being able to sell at below-tax prices.

Having dealt with both the tobacco amendment and illicit trade, we call on the ministry and government to meaningfully engage on both issues and appreciate that Fawu’s clarion call is based on jobs security for citizens, health to the nation and revenue to the fiscus.

Fawu will not encourage people to take up smoking. Fawu encourages them to quit. We do so mindful that tobacco is still a legal product for consumption and has not been banned like drugs.

But Fawu will not stand idle when inappropriate policies and laws are introduced and when illicit trade is tolerated.

In a country faced up with triple crises of a 38% unemployment rate, 40% poverty rate and the world’s widest inequality gap, we consider one job loss to be one too many and we cannot pursue “luxurious” policies or laws meant for developed nations. Therefore, survival- ist economic activities such as those by hawkers, tuckshop and spaza operators and tavern owners cannot be “bastardised” for engaging in survival activities by trading in a legal product.

Equally, we cannot become a country allowing law-breaking corporates to flourish. You do not enhance competition by allowing or encouraging law-breaking and tax-evading players. Instead, we call for the relevant authorities, particularly the SA Revenue Service, to clamp down on illicit traders by enforcing compliance, hence our protest march to the Treasury to ask the minister of finance to ensure this happens.

Meanwhile we welcome the reported public pronouncement by Sars on their reaffirmed commitment to clamp down on the illicit trade in tobacco products and hope they get funding and build the needed institutional capacity and mobilise capabilities of individuals with the requisite skills.

‘We consider one job loss to be one too many’