BRITISH American Tobacco Zimbabwe (BAT) has called on governments across Southern Africa to carefully consider the unintended consequences of increased taxes on tobacco products with the intention of reducing tobacco consumption.
During the eve of World No Tobacco Day which was commemorated yesterday, the World Health Organisation (WHO) called for an increase in tax on tobacco products to highlight health risks associated with its use.
WHO said there was a need to develop a comprehensive tax policy for all tobacco products, making it less affordable over time and thereby reducing consumption and prevalence.
However, this has not go down well with BAT Zimbabwe which said it does not believe an increase in taxes on tobacco products will result in decreased consumption, but instead, smokers may continue to look for cheaper and illicit products.
“What’s more is that the call for increased taxation on tobacco products is being made from within a context of already high tobacco taxes across Southern Africa, and an economic environment in which the disposable income of consumers remains stretched,” BAT said in a statement.
“Often, with an increase in taxes on tobacco products, a knee-jerk reaction for consumers under severe economic pressure is to unwittingly purchase cheaper cigarette brands in order to save money.
“Regrettably, these brands are often illicit brands that have a severe economic and social impact,” part of the statement reads.
BAT said it had observed a dramatic increase in the incidence of illicit trade in countries with higher excise rates on tobacco products, many of whom are struggling to curb the problem despite concerted efforts from law enforcement authorities.
“Some research indicates that up to 660 billion cigarettes a year are illegal — smuggled, counterfeit or tax-evaded in other ways. That’s up to 12% of world consumption. Closer to home, illicit cigarettes are already widely available throughout both formal and informal retail channels across Southern Africa,” BAT said.
BAT urged governments seeking to reduce tobacco usage to broaden the scope of their considerations beyond increases in tax.
It said public health objectives cannot be the sole aspect of consideration when determining fiscal policy. WHO estimates that there are currently one billion smokers across the globe and that by 2050 this number could increase to 2,2 billion.
Given this estimation, BAT believes that it is going to be important for regulators to separate the issues around the sale of a legal, regulated but risky product and the unintended consequences that may arise from bad policy decisions.
“While we acknowledge the risks associated with smoking, we believe in a sensible approach to tobacco taxation that takes into account all the potential unintended consequences such as the illicit trade in tobacco products,” BAT said.