BAT calls for review of tobacco taxes
Correspondent | Thursday June 5, 2014 11:06
The company said instead smokers may continue to look for cheaper and often 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 consumer’s remains stretched,” read the statement from the company.
In February this year, the Ministry of Health (MoH) introduced a 30 percent tobacco levy, which will be used to fund anti-tobacco initiatives and other related activities.
BAT Botswana general manager, Godfrey Machanzi told Mmegi Business this week they have asked that in seeking to reduce tobacco usage, the government should broaden the scope of their considerations beyond increases in tax.
“Public health objectives cannot be the sole aspect of consideration when determining fiscal policy. The unintended consequences as a result of increases in tax on tobacco products may, in fact, jeopardise the achievement of these public health objectives,” he said.
Machanzi said that in developing tobacco control policy, they would encourage a focus on balanced, evidence-based and enforceable policy that does not exacerbate the illicit trade in cigarettes and threaten the very health agenda, which government is trying to achieve.
“There are other considerations beyond the health ones as well as many impacted stakeholders that we would encourage Government to consult with in developing tobacco policies. We are calling for a recognition of this as well as a more inclusive policy making process,” said Machanzi. Tobacco use is one of the main risk factors for a number of chronic diseases including cancer, lung diseases and cardiovascular problems. According to MoH, tobacco claims approximately six million lives and causes more than half a trillion dollars of economic damage each year worldwide. Projections are that it will kill as many as one billion people this century if appropriate action is not taken. Increasing tax ‘sins’ is not the best way to curb smoking, argued Machanzi, noting that such forces smokers to purchase cheaper cigarette brands in order to save money. “Regrettably, these brands are often illicit brands that have a severe economic and social impact,” he added.
Some research indicates that up to 660 billion cigarettes a year, are illegal - smuggled, counterfeit or tax-evaded in other ways.
“Closer to home, illicit cigarettes are already widely available throughout both formal and informal retail channels across southern Africa. In some countries, such as South Africa, the illicit cigarette incidence is nearly three times the global average, which is alarming,” he said.
Earlier this year, the Tobacco Institute of Southern Africa (TISA) raised a concern that the consequences of the 30 percent levy does not only affect Botswana but the Southern African Customs Union (SACU) revenues because as the costs of compliance increase, traders will seek ways to avoid payment of the levies and other taxes imposed by government.
TISA CEO Francois Van der Merwe said apart from local concerns, the levy goes against the spirit of the SACU agreement as it eradicates trade harmonisation and hampers the free flow of goods within the SACU community.