TELITA SNYCKERS: The tobacco industry has never been this vulnerable — here’s how to use that to do some good
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It’s clear that the ban on smoking isn’t achieving its objectives.
Before the cigarette ban around 20% of South Africans smoked cigarettes. While the ban may have seen nearly half of them quit, many of them have indicated they intend to resume smoking again once the ban is lifted.
What this means is, once the ban has been lifted, we may see the prevalence of smoking in the general population drop by 1 percentage point, to 19%. If the goal was to stop people smoking, the ban has clearly failed.
In the meantime, 93% of the remaining smokers continue to buy cigarettes — resulting in 100% of the tobacco market being illicit, R53m in taxes being lost daily, and citizens being forced to collude with career criminals.
With smokers fuming, illicit trade experts at the end of their wits, and the government sticking to its guns on the importance of reducing smoking rates, the time has never been better for a radical revamp of the way we tax cigarettes.
The argument for sin taxes
Excise duties on products like cigarettes are an obvious policy choice for a government wanting to reduce smoking rates.
As a general rule, governments tax cigarettes because they want fewer people to smoke them, but also to help cover the economic impact from having to pay for smoking-related healthcare costs.
In theory, the money collected from the tobacco industry should compensate for the economic losses we sustain from smoking-related healthcare costs. But they don’t: the economic cost of smoking in SA — roughly R59bn a year — dwarfs even the contribution paid by British American Tobacco (BAT) of around R14bn a year.
However, what we’ve seen over the past few decades is a dramatic fall in the number of people smoking. In 1993, 33% of South Africans smoked, but by 2010, it had plateaued at around 20%, where it still sits.
So what drove the drop in smoking? The answer is simple: good tobacco taxation policy.
And what’s the reason why the prevalence in smoking hasn’t decreased further since 2010? The answer is equally clear: poor tobacco taxation policy.
The fact is, the government has tried, and failed, to increase excise duties on cigarettes for decades. Unless the tax is adjusted regularly, it is eroded by inflation. In 1994, the finance minister announced that the government would increase the excise tax on tobacco products from 20% ...
Before the cigarette ban around 20% of South Africans smoked cigarettes. While the ban may have seen nearly half of them quit, many of them have indicated they intend to resume smoking again once the ban is lifted.
What this means is, once the ban has been lifted, we may see the prevalence of smoking in the general population drop by 1 percentage point, to 19%. If the goal was to stop people smoking, the ban has clearly failed.
In the meantime, 93% of the remaining smokers continue to buy cigarettes — resulting in 100% of the tobacco market being illicit, R53m in taxes being lost daily, and citizens being forced to collude with career criminals.
With smokers fuming, illicit trade experts at the end of their wits, and the government sticking to its guns on the importance of reducing smoking rates, the time has never been better for a radical revamp of the way we tax cigarettes.
The argument for sin taxes
Excise duties on products like cigarettes are an obvious policy choice for a government wanting to reduce smoking rates.
As a general rule, governments tax cigarettes because they want fewer people to smoke them, but also to help cover the economic impact from having to pay for smoking-related healthcare costs.
In theory, the money collected from the tobacco industry should compensate for the economic losses we sustain from smoking-related healthcare costs. But they don’t: the economic cost of smoking in SA — roughly R59bn a year — dwarfs even the contribution paid by British American Tobacco (BAT) of around R14bn a year.
However, what we’ve seen over the past few decades is a dramatic fall in the number of people smoking. In 1993, 33% of South Africans smoked, but by 2010, it had plateaued at around 20%, where it still sits.
So what drove the drop in smoking? The answer is simple: good tobacco taxation policy.
And what’s the reason why the prevalence in smoking hasn’t decreased further since 2010? The answer is equally clear: poor tobacco taxation policy.
The fact is, the government has tried, and failed, to increase excise duties on cigarettes for decades. Unless the tax is adjusted regularly, it is eroded by inflation. In 1994, the finance minister announced that the government would increase the excise tax on tobacco products from 20% ...
