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Business Reporter
British American Tobacco Zimbabwe (Holdings) Limited has urged governments in Southern Africa to carefully consider the unintended consequences of increased taxes on tobacco products with the intention of reducing tobacco consumption. In a statement marking World No Tobacco Day, BAT Zimbabwe said it does not believe that an increase in taxes on tobacco products would result in decreased consumption, instead, smokers may continue to look for cheaper, 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 consumers remains stretched,” BAT said.
“Often, with an increase in taxes on tobacco products, a knee-jerk reaction for consumers under severe economic pressure is to unwittingly purchase cheaper cigarette brands in order to save money.”
BAT said the company had observed a dramatic increase in the incidence of illicit trade in countries with higher excise rates on tobacco products, many of whom are struggling to curb the problem despite concerted efforts from law enforcement authorities.
Up to 660 billion cigarettes a year are illegal — smuggled, counterfeit or tax-evaded in other ways.
“BAT Zimbabwe urges governments seeking to reduce tobacco usage to broaden the scope of their considerations beyond increases in tax. Public health objectives cannot be the sole aspect of consideration when determining fiscal policy,” BAT Zimbabwe added.
“The unintended consequences as a result of increases in tax on tobacco products may, in fact, jeopardise the achievement of these public health objectives.”
The World Health Organisation estimates that there are one billion smokers across the globe and that by 2050 this number could increase to 2.2billion.
While acknowledging the risks associated with smoking, BAT Zimbabwe said a sensible approach to tobacco taxation that takes into account all the potential unintended consequences such as the illicit trade in tobacco products was important.
Online Reporter