– claims hike in tobacco taxes will amplify illicit trade
By: Jeanna Pearson
Key stakeholder in the tobacco trade, Demerara Tobacco Ltd. claims they were excluded from the consultation process for the drafting of the new tobacco legislation, which is expected to be tabled early next year.
In an interview with the Kaieteur News, Managing Director Maurlain Argyle-Kirton said it was disturbing that the Company was not included in the consultations.
“Unfortunately and disturbingly, Demerara Tobacco has not been consulted despite many consultations on the Bill over the years,” she stated, stressing that the Company has not laid eyes on the content of the Bill as yet.
She asserted that despite many attempts to have engagement with the Public Health Ministry, no one sought to meet them.
She questioned why a legislation, that is so important to Guyana’s economy and public health, should be managed so “confidentially.” The last time the Company tried to gain an audience with the Minister was last month, she said.
The tobacco legislation is intended to protect present and future generations from the “devastating harms” of tobacco use, exposure to tobacco smoke, and specifically to prevent tobacco use among youths. The legislation would also seek to ensure that the public is protected from the commercial and other vested interests of the tobacco industry, while preventing the illicit trade in tobacco products.
But Argyle-Kirton suggested that a hike in tobacco taxation would lead to an increase in the illicit trade in tobacco products.
She said Suriname is a bona fide example of a rise in the illicit trade following an increase in taxation.
“They woke up one morning to increase the taxes, driven by PAHO to raise it by 75 percent of the retail price and today illicit trade is 40 percent and growing,” she stated.
PAHO, on the other hand, in a statement had argued that the tobacco industry and criminal groups are among those who profit from this illegal trade and thus urged its member countries to ratify the Protocol to Eliminate the Illicit Trade in Tobacco Products.
The Protocol would help to smother this trade through a range of measures relating to the tobacco supply chain, including the licensing of imports/exports and manufacture of tobacco products, the establishment of tracking and tracing systems and the imposition of penal sanctions on those responsible for illicit trade. It would also criminalise illicit manufacturing and cross-border smuggling of tobacco products.
PAHO stated that although the tobacco industry publicly shows itself as a partner in the fight against illicit tobacco, the industry’s underground behavior revealed something else. PAHO indicated that internal documents released as a result of court cases demonstrate that the industry has actively encouraged illicit trade internationally, working to block execution of tobacco control measures such as tax increases by arguing that these will fuel the illicit trade.
Argyle-Kirton, however, stated that the government needs to understand how to manage the issue, considering both their revenue and the public’s health.
Corporate Affairs Director of British American Tobacco Caribbean and Central America Eduardo Castaneda posited that it is important for Guyana to have a regulation that is balanced and enforceable with its resources available. “Why have regulations when you can’t enforce them?” he asked.
He stated that any increase in cigarette taxation be transferred into pricing for the consumers, and if pricing is raised then smoking will inevitably swell out of control. “The consumer will continue to look for what he/she considers is a cheap brand and a cheap brand is more than likely smuggled. Once that starts to happen, we would have a whole new dimension in the economy. And the government loses revenue from legit companies because everything goes underground,” he said, adding that the situation does not appear to bode well for the government.
He explained there was a raise in tobacco taxation in Panama and the country suffered a boom in the illicit trade. “The increase caused 75% of the Panamanian market to have smuggled tobacco,” he said, reiterating that the domino effect of the underground trade does not reduce consumption.
Citing that Brazil has a 35% increase in its illicit trade because of the growing taxation, Castaneda alleged that all of these countries with increased taxation were targeted by different organizations, like the Pan American Health Organization (PAHO), to increase excises.
Regional Advisor on Tobacco Control at PAHO, Dr. Adrianna Blanco had indicated that the government needs to increase taxes on tobacco.
“There is a need to increase taxes on tobacco. It makes tobacco more expensive and less accessible for children while providing revenue for the country,” she indicated, highlighting that only one country has reached the level of tax increase that is recommended by WHO, which is that the taxes represent 75% of the retail price of the cigarette.
Charity Cancer Research UK (CRUK) researchers have indicated that tripling tobacco tax globally would cut smoking by a third, and avoid 200 million premature deaths this century from lung cancer and other diseases. The researchers stated that increasing taxes by a large amount per cigarette would motivate people to quit smoking altogether rather than switch to a cheaper brand.
At present, cigarettes are so easily accessible they are sold single—the price going as low as $40. “The tobacco industry doesn’t sell cigarette they sell happiness, having friends and you looking cool…and that’s why you see so many teens smoking,” Blanco avowed, adding the legislation would ensure that there were strict regulations concerning the advertisement of tobacco.
Each year, tobacco kills 6 million people— 5.4 million active smokers and 600,000 non-smokers exposed to secondhand smoke. It is the single legal consumer product that kills up to half of its users when used exactly as intended by the manufacturer, costing the global economy an estimated US$200 billion each year.
Argyle-Kirton charged that while there is a need to protect the public’s health, regulation should be balanced.
“The tobacco industry is a significant contributor to the government revenue base. We should be able to co-exist,” she said, adding: “Smoking is an informed adult choice and regulation should allow the smoker to enjoy the habit and also protect those from second hand smoke.”
“Non-smokers have rights and so does smokers,” she stressed further.
Castaneda stated that the tobacco industry understands that there is going to be restriction on smoking in public places and they accept it but their position is that the rights of smokers be upheld.
“Our position is that space be made available for smokers just as space is made available for non-smokers. And that is what we want to propose,” he said, highlighting that regulations should be balanced and not lop-sided.
“So the similar liberties and concessions that are being granted to PAHO and other stakeholders should be granted to us so that at the end of the day there is a balance toward tobacco smoking,” he added.
Argyle-Kirton said also, “We are cognisant of the fact that there is a need to protect public health but there should be a balanced approach. So from a public health standpoint they may say we were able to shut them down but what will happen is something will start up underground and no government wants to stand at any public forum and say the size of my underground economy is rising…no government will talk about that,” she argued.
“The industry is not saying that it doesn’t want regulation, it’s saying that consultation should have the aim of balance regulation,” she stated.
She also denied Blanco’s statement that the tobacco industry in Guyana was heavily influencing the delay in the tabling of the bill. She said Demerara Tobacco has, in no way, interfered with the tabling of the legislation.
Blanco had stated that the tobacco company was very active in Guyana—building mangroves and providing money for scholarships. “… and all that puts them in collaboration with the government. So if the government on one hand is receiving money from a company and then want to ban the very product that company is selling, then they will have a conflict of interest,” she posited.
“Dr. Blanco’s statement is highly erroneous. We have corporate initiatives yes but we have not influenced the legislation,” she said. “In my view, I believe Dr. Blanco is making a generic statement… I know she made mention about the mangroves but the mangrove project was six years ago and we no longer have any branding on it. We are not involved in any significant amount of sponsorship,” she noted.
She said the passing of the piece of legislation would indeed affect the livelihood of persons working in the tobacco industry since they solely depend on the revenue of the tobacco. She said Demerara Tobacco employees, their partners, employees and the retailers would all be affected.
Blanco had stated that the tobacco industry was “skilled” at inflating the number of Guyanese employed in the industry, so as to try to stop the government from banning cigarette smoking.
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