A consortium of public health NGO’s have called on Zambian government to raise excise tax on tobacco in order to achieve the public health goal of reducing the death and disease caused by tobacco use. Tobacco use is the single largest cause of preventable death globally, killing more than five million people each year. Tobacco use also creates considerable economic costs, from greater spending on health care to treat the diseases it brings on in users and those exposed to tobacco smoke to the lost productivity resulting from the premature deaths it causes.
Well over one hundred studies have examined the impact of tobacco product taxes and prices on overall tobacco use. These studies consistently find that increase in taxes and prices on tobacco products lead to reduction in tobacco use. Given the evidence on the effectiveness to higher tobacco product prices in reducing tobacco use, the World Health Organization (WHO) makes higher tobacco taxes a central element of its’ global public health treaty; the WHO Framework Convention on Tobacco Control (WHO FCTC). Article 6 of the FCTC calls upon parties to the treaty to use tax and price policies to reduce tobacco use. While Article 15 calls for the adoption and implementation of measures aimed at eliminating the illicit trade in tobacco products that can undermine the effectiveness of increased tobacco taxes.
“Of the various types of taxes applied to tobacco products, excise taxes are of the most importance when considering health objectives. These taxes will raise the price of tobacco products relative to the price of other goods and services, unlike taxes that apply to a wide variety of goods and services, such as value added taxes and general consumption taxes. Moreover, relative to other products also subject to some form of excise, it is the excess over the average excise tax rate that increase the effectiveness of the tobacco excise. With the country’s Ad valorem excise at only 30.61% and no specific excise the total tax as a percentage of retail price of cigarette is only 44.41%. This is not effective. Raising tobacco taxes so that they account for at least 70 percent of retail prices would lead to significant price increase, induce many current users to quit and deter numerous youth from taking up tobacco use, leading to large reductions in the death and diseases caused by tobacco use. At the same time, such tax increase will generate significant increase in tobacco tax revenue. The idea is to reduce the affordability of tobacco specifically to vulnerable groups such as the youth and the poor _ but at the same time increase the health benefits for these same groups. We therefore, want to see tobacco excise tax increase as part of a comprehensive strategy to reduce tobacco use. In this regard therefore, government must resist the temptation to view low taxes and prices as a pro-poor policy. Low prices will just result in greater tobacco use among the poor, causing them to bear a disproportionate share of the burden of the health and economic consequences of tobacco use” says Muyunda Ililonga Coordinator of Smoke Free Alliance Zambia.
The NGO’s also warned about the misinformation from the tobacco industry and advised against paying undue attention to concerns about the regressivity of higher tobacco taxes especially with relation to competition, employment and inflation.
“To the extent that concerns about the impact of tax increases on the poor remains, these can be offset by using the revenues generated from a tax increase to support efforts to help poor tobacco users quit and other health promotion efforts targeting the poor. Reduction in tobacco- dependent employment following tobacco domestic tax increases will be offset by increases in employment in other sectors as spending on tobacco productions is replaced by spending on other goods and services. Given the relatively low share of tobacco taxes on tobacco prices, tobacco tax increase will generally have a small impact on inflation.” Says Angela Nguluwe, Campaigns Manager of Katuba Youth Livelihood Project.
The health advocate also called for elimination of tax and duty free sales of tobacco products and the strengthening of tax administration to increase capacity to monitor tobacco product markets and evaluate the impact of tobacco tax increases.
“We call for the establishment of a tobacco excise department within ZRA which should collaborate with customs in order to eliminate non-compliance and monitor trade. This must include adoption of up-to-date technologies in order to increase efficiency of tax collection and minimize tax avoidance and evasion. Further all involved in tobacco product manufacturing and distribution must be licensed. This makes it easier to identify and penalize those engaged in tax evasion. Empirical evidence demonstrate that an increase in the expected penalty for illegal behavior reduces crime. Strong tobacco tax enforcement will raise the likelihood that those engaged in illicit trade in tobacco products will be caught, while high administrative penalties will raise the swiftness and severity of the punishment for such illegal activity”. Says Brian Moonga, Secretary for Zambia Media Network Against Tobacco (ZAMNAT).
Tobacco excise taxes are a powerful tool for protecting public health while at the same time an efficient source of government revenues.
SFAZ is a coordinating organization for NGO’s working towards an effective implementation of the Framework Convention on Tobacco Control FCTC in Zambia. For more details send query to [email protected]
SMOKE FREE ALLIANCE ZAMBIA (SFAZ)