Betreff: National Council Against Smoking Press Release |
Von: "Yussuf Saloojee" |
Datum: 22.07.2020, 07:27 |
An: joossens@gmail.com |
On 21 Jul 2020, at 11:57 AM, Luk Joossens wrote:
Dear all,
The University of Cape Town has published today its second report on smoking in South Africa during the lockdown.
The authors argue that the ban was perhaps not a good idea and that higher taxes would have been better.
"We argue that, instead of imposing a sales ban to prevent people from smoking cigarettes, the government would have been able to achieve a similar outcome by substantially increasing the excise tax (from the current level of R17.40 per pack of 20 cigarettes to R50 per pack or more). Most smokers that have quit smoking during lockdown did not quit because of health concerns or because they wanted to follow the government’s regulations, but because the illegal market that was created by the lockdown made cigarettes unaffordable. Critics of a strategy to increase the excise tax substantially would argue that to do so would increase illicit trade. That may be possible, but at least it will not increase to 100%, as is currently the case. Our survey indicates that, more than anything else, the price of cigarettes made people quit during lockdown.
A substantial (for instance, 100%) immediate increase in the excise tax, followed by above- inflationary increases in subsequent years, would counteract the impact of a likely price war, once the sales ban is lifted. It would allow the National Treasury and the South African Revenue Services to claw back some of the revenue that they have lost during lockdown. Furthermore, it would encourage smokers to quit, and incentivise many quitters (who may otherwise resume smoking when the price falls to its “normal” level) to stay non-smokers. However, an important proviso for such a tax strategy is that the illicit trade in cigarettes is under control. This will be difficult, given that the illicit operators have been able to entrench themselves during the lockdown period. However, with political will and with the appropriate use of technology (such as digital tax stamps and an independent Track and Trace solution), this can be done.
In our first report we argued that, although well-intentioned at the outset, the extension of the cigarette sales ban into lockdown Level 4 was an error. Based on the results of the second survey, we believe that the further extension of the sales ban, into lockdown Level 3, amplified the error. We recommend that the government expeditiously lifts the ban on the sale of cigarettes; substantially increases the excise tax on tobacco products; and implements better tax enforcement measures."
In my opinion, there is always a big risk if you introduce a sales ban, without preparations, in a market where illicit sales market is already well developed.
Anyway, the findings of this report deserve a proper discussion;
Best wishes
Luk Joossens
Brussels, Belgium
On 29 Jun 2020, at 08:14, Luk Joossens <joossens@gmail.com> wrote:
Hi Yussuf,
It is great that you won this case and I hope that you will also win the case introduced by BAT in August.
However, it should be useful to know more details on the effect of the ban when sales start again.
How many smokers stopped smoking, how many relapsed, how many bought cigarettes on the illicit market, how many remained on the illicit market, was the tobacco industry supplying the illicit market, which policies were put in place to prevent relapsing and combat illicit trade?
South Africa has excellent researchers on illicit trade at the University of Cape Town. I hope to read their findings on the impact of the ban next year.
Best
Luk Joossens