Full Circle
It’s that time of year again. In countries around the region, the tax people are looking at their revenue targets and trying to figure out how to raise more rupiah, rupees, ringgit or rial.
Obviously, tobacco products will be prime targets for tax increases needed to meet the demand for increased tax revenue, and if the country represented also happens to be an FCTC signatory, which is quite likely, then the tax authorities will be able to find added justification within its guidelines and suggestions for slapping even more tax onto smokers. From their perspective, gouging tobacco users and manufacturers further is a win-win situation. FCTC suggests that raising taxes on tobacco products leads to reduced smoking and a decline in smoking-related illnesses while helping to swell government coffers. So it’s really a no-brainer: increase the taxation on cigarettes to ever-more unaffordable highs and one’s citizens will be healthier, they will smoke less and the government will earn more money, according to the wisdom of FCTC. So the budget will no doubt be presented with the idea that more smokers will quit and the declining number of suckers (pun intended) will contribute ever-larger amounts of tax income to the government. Problem solved, brownie points all round, nothing left to do but count the money coming in.
Except that in reality this is not what actually happens.
What actually happens, as is clearly evident in countries such as Thailand and Malaysia among many others, is that counterfeiters, cross-border traders and smugglers see their business growing and growing while legitimate manufacturers see their brands’ value being compromised as sales plummet. Far from earning more revenue, governments complain about the millions of tax dollars they lose to illicit trade and smokers end up buying untaxed and unregulated tobacco products that wind up doing them more harm than the regulated, licit goods that they can no longer afford.
As has been widely reported, Malaysia’s illicit cigarette trade has surpassed 30% market share. Thailand has seen lower-priced independent brands, some of which are traded tax unpaid across the border, capturing 4% of the domestic market share in the last 12 months.
Countries such as Pakistan have been grappling with endemic smuggling issues created by relatively high taxation on locally produced tobacco products for years now.
China struggles to contain the manufacture and trade of counterfeit cigarettes within its own borders, and must resort to to ever-more sophisticated – and costly – packaging solutions to help protect its licit brands from duplication.
In Europe, North America and other developed markets, while the incidence of smoking (of licit products) reportedly is decreasing, the fact is that high taxation ensures that the illicit tobacco trade continues to grow at a staggering rate.
Ok, we’ve said all this before, and we realize we’re preaching to the converted here, but what is it going to take before governments wake up to the fact that much of what they are being persuaded to do by WHO’s (pharmaceutical company financed) FCTC and Bloomberg/Gates financed anti-smoking groups to combat smoking is based on bad science, hysterical rhetoric and demonstrably false reasoning?
Not to mention the fact that throughout Asia foreign-funded anti-smoking activists have infiltrated government committees and departments unconstitutionally and illegally. For example, in the Philippines there is actually a Bloomberg Foundation funded desk staffed by non-government employees inside the Department of Health, no doubt ensuring that the DOH is effectively monitored and ‘advised’ in its anti-smoking efforts.
In short, the more governments seek to control smoking by raising taxes, the more smokers are going to be lured into buying untaxed and unregulated black market products, and the more governments are going to lose out on tax revenues. The solution has become the problem.
And bad science, illegal funding and corrupting governments have now become the modus operandi of anti-smoking crusaders around the world. Sound familiar?
Glenn Anthony John
Obviously, tobacco products will be prime targets for tax increases needed to meet the demand for increased tax revenue, and if the country represented also happens to be an FCTC signatory, which is quite likely, then the tax authorities will be able to find added justification within its guidelines and suggestions for slapping even more tax onto smokers. From their perspective, gouging tobacco users and manufacturers further is a win-win situation. FCTC suggests that raising taxes on tobacco products leads to reduced smoking and a decline in smoking-related illnesses while helping to swell government coffers. So it’s really a no-brainer: increase the taxation on cigarettes to ever-more unaffordable highs and one’s citizens will be healthier, they will smoke less and the government will earn more money, according to the wisdom of FCTC. So the budget will no doubt be presented with the idea that more smokers will quit and the declining number of suckers (pun intended) will contribute ever-larger amounts of tax income to the government. Problem solved, brownie points all round, nothing left to do but count the money coming in.
Except that in reality this is not what actually happens.
What actually happens, as is clearly evident in countries such as Thailand and Malaysia among many others, is that counterfeiters, cross-border traders and smugglers see their business growing and growing while legitimate manufacturers see their brands’ value being compromised as sales plummet. Far from earning more revenue, governments complain about the millions of tax dollars they lose to illicit trade and smokers end up buying untaxed and unregulated tobacco products that wind up doing them more harm than the regulated, licit goods that they can no longer afford.
As has been widely reported, Malaysia’s illicit cigarette trade has surpassed 30% market share. Thailand has seen lower-priced independent brands, some of which are traded tax unpaid across the border, capturing 4% of the domestic market share in the last 12 months.
Countries such as Pakistan have been grappling with endemic smuggling issues created by relatively high taxation on locally produced tobacco products for years now.
China struggles to contain the manufacture and trade of counterfeit cigarettes within its own borders, and must resort to to ever-more sophisticated – and costly – packaging solutions to help protect its licit brands from duplication.
In Europe, North America and other developed markets, while the incidence of smoking (of licit products) reportedly is decreasing, the fact is that high taxation ensures that the illicit tobacco trade continues to grow at a staggering rate.
Ok, we’ve said all this before, and we realize we’re preaching to the converted here, but what is it going to take before governments wake up to the fact that much of what they are being persuaded to do by WHO’s (pharmaceutical company financed) FCTC and Bloomberg/Gates financed anti-smoking groups to combat smoking is based on bad science, hysterical rhetoric and demonstrably false reasoning?
Not to mention the fact that throughout Asia foreign-funded anti-smoking activists have infiltrated government committees and departments unconstitutionally and illegally. For example, in the Philippines there is actually a Bloomberg Foundation funded desk staffed by non-government employees inside the Department of Health, no doubt ensuring that the DOH is effectively monitored and ‘advised’ in its anti-smoking efforts.
In short, the more governments seek to control smoking by raising taxes, the more smokers are going to be lured into buying untaxed and unregulated black market products, and the more governments are going to lose out on tax revenues. The solution has become the problem.
And bad science, illegal funding and corrupting governments have now become the modus operandi of anti-smoking crusaders around the world. Sound familiar?
Glenn Anthony John
Publisher/Editor
