8 August 2000
SAYS NEW WHO/WORLD BANK PUBLICATION
Chicago—Higher taxes are the key to cutting cigarette consumption, especially among the poor, the young, and the relatively uneducated, the World Health Organization (WHO) and the World Bank conclude in a major new publication released today. A tobacco tax increase has been found to be a very effective tool for lowering tobacco use, particularly in developing countries. The publication concludes that increased tobacco taxes do not lead to net job losses. It also debunks the perception that the benefits of higher taxes are negated by increased levels of smuggling. In fact, it is poor law enforcement that sets the stage for this illegal activity.
Higher taxes leading to a 10% rise in cigarette prices would motivate about 42 million people to quit smoking, estimate WHO and World Bank researchers. Raising cigarette taxes could prevent about 10 million tobacco-related deaths (9 million of these in low- and middle-income countries). Not only will tobacco consumption and tobacco deaths drop, but government tobacco revenues will actually rise by 7% on average for a 10% increase in cigarette taxes.
The 512-page book, entitled Tobacco Control in Developing Countries,* is the outcome of a three-year research project involving a team of about 40 economists, epidemiologists, social scientists, public policy specialists and legal experts from 13 countries.
Dr Gro Harlem Brundtland, WHO Director-General, said: "Tobacco control is a major focus at WHO. The biggest cost of tobacco use is the disease and suffering it brings to millions. Moderate action, such as higher tobacco taxes, could ensure tremendous health gains. Governments wishing to halt the rising toll of tobacco-related deaths should strongly consider increases in tobacco taxes as a matter of priority."
Mr James D. Wolfensohn, President of the World Bank, said the economic aspects of tobacco control are now receiving strong global attention. "Tobacco control is a high priority in our efforts to improve global health. We are now working with governments in many countries to act on the evidence and recommendations in Curbing the Epidemic, the World Bank's 1999 report. Now, Tobacco Control in Developing Countries makes available a wealth of sound evidence and in-depth analysis of key economic issues in tobacco control," he stated.
Notable findings of the study are summarized below:
Almost a third (30%) of all cigarette exports—about 355 billion cigarettes a year—are smuggled. This is a far higher percentage than the smuggled amount of most internationally-traded consumer goods. The problem is worst where illegal activity goes unchecked. The publication's authors note that raising the price of cigarettes could increase sales of contraband cigarettes. However, this new research suggests that smuggling is less likely in settings with strong capacity for enforcing the law. Smuggling is not a direct result of high tobacco prices.
Individual governments that have tried to reduce smuggling by slashing taxes have often suffered a fall in revenues and an increase in consumption. "A more effective response," says Frank Chaloupka, Professor at the University of Illinois, Chicago and joint editor of the book, "would be to keep taxes high and crack down on smuggling. Prominent tax stamps, serial numbers, special package markings, health warning labels in local languages and better tracking systems are effective against smuggling."
Impact on jobs
The report provides fresh evidence to counter fears that a slump in tobacco sales would lead to millions of permanent job losses worldwide. Any impact on employment would be minimal and gradual, says Dr Prabhat Jha, Senior Scientist at WHO, and joint editor of the book.
"If tobacco consumption fell, most countries would experience no net job losses and some would even experience net gains, as money once spent on tobacco was diverted to other goods and services, creating new jobs," he said. "However, if global demand fell, a few tobacco-exporting countries—especially in sub-Saharan Africa—would experience job losses in the longer term and would need some assistance during the adjustment period," he cautioned.
In addition to raising taxes and curbing smuggling, a package of non-price measures would further reduce demand for tobacco products. These measures include: a total ban on cigarette advertising and promotion (partial bans have little or no impact); consumer information; and smoking restrictions in public places and workplaces. Together these would enable 23 million smokers alive in 1995 to quit smoking and would prevent an additional 5 million tobacco-related deaths worldwide, including 4 million in low- and middle-income countries. The addition of improved access to nicotine replacement or other cessation therapies would help an additional 6 million people to quit and save 1 million lives.
Despite their shorter lifespan, smokers appear to incur higher health care costs than non-smokers. In high-income countries, the treatment of tobacco-related diseases swallows up to 6-15% of annual spending on health. In both high-income countries and some low-income countries, as much as 1% of GDP is spent on health care for smokers.
A package of tobacco control measures can be delivered at very low cost, argues the study. In high-income countries, comprehensive control programmes account for 0.1%-1% of public spending on health. In low-income countries, tobacco control would constitute a small fraction of the total spending on essential health services.
Restrictions on supply
Efforts to reduce the supply of cigarettes have been largely ineffective. Prohibition and trade embargoes are unrealistic, while attempts to restrict cigarette sales to teenage smokers have usually been unsuccessful, even in countries with substantial enforcement capacity. Elsewhere, crop substitution schemes have also failed, largely because of stronger financial incentives to grow tobacco.
Unless smoking patterns change, 1 billion people are expected to die from smoking in the 21st century—ten times more than those killed by tobacco throughout the 20th century. "Even modest reductions in this immense disease burden would bring highly significant health gains," says Dr Derek Yach, WHO Executive Director in charge of Non-communicable diseases, who leads WHO's Tobacco Free Initiative.
For further information please contact: Mr Gregory Hartl, WHO Spokesperson; Mobile Phone: (+41 79) 203 6715; or Ms Melinda Henry, WHO Public Information Officer, Geneva, Telephone: (+41 22) 791 2535; Facsimile: (+41 22) 791 4858; or E-mail:firstname.lastname@example.org. For technical questions on Tobacco Control in Developing Countries, please contact Dr Prabhat Jha or Professor Frank J. Chaloupka. They may be contacted through Melinda Henry, WHO in Geneva or through Mr Christopher J. Lackner, The MWW Group, Chicago; Telephone: (+1 312) 853 3131; Facsimile: (+1 312) 853 0955; or E-mail: email@example.com
Jha, Prabhat and Chaloupka, Frank J., eds. Tobacco control in developing countries. Oxford: Oxford University Press, 2000. Price: US$ 49.50 paperback; ISBN 0192632469. To order from outside the United States, please dial: +44 (0)1536 454534 or e-mail:firstname.lastname@example.org To order from the United States, please call: 1-800-451-7556.