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[b]Island Editorial Courtesy Island[/b]
President Maithripala Sirisena, who as health minister in the Mahinda Rajapaksa administration took a special interest in ensuring that a powerful health warning that would hit smokers between their eyes, is carried on cigarette packets. He must surely be more than happy that he is finally having his way. While Sirisena wanted the graphic health warning to cover 80 percent of the front and back panels of cigarette packs, and gazetted regulations to that effect, the courts by a two to one split verdict held that 60 percent would be sufficient. It is now going to be 80 percent following legislation and no reasonable person would contest that decision. The information and evidence available conclusively establishes the incontrovertible fact that cigarettes are a killer and it is only the most stupid who will continue smoking. While it may be difficult for already addicted smokers to give up, the present efforts will certainly discourage young people from acquiring the self-destructing habit. So the present developments must be unanimously welcomed.
Having said that, we would like to return to a subject we have dwelt with before and ask why the money spinning beedi industry which flourishes in this country has been totally let off the hook as far as health warnings on their packaging is concerned. Apart from that, beedis are barely taxed. Successive government have over a long period of time been beating the cigarette industry with a price stick and today over 90 percent of the price that a smoker pays for a cigarette goes to the government as taxes. Neither prohibitive prices – each time a smoker lights up a popular brand of cigarette, he/she is literally burning 20 or 30 rupees – nor the increasingly tight regulations including chillingly graphical health warnings has driven Ceylon Tobacco Company PLC (CTC), the country’s only legal cigarette manufacturer, out of business. It continues to post super profits, pays its shareholders (the vast majority of who are foreign) fat dividends and its share price is among the highest among companies quoted on the Colombo Stock Exchange. The business continues to be most profitable both for British American Tobacco (BAT), the predominant shareholder of CTC, and for the Government of Sri Lanka which collects nearly Rs. 80 billion annually in taxes from the tobacco industry.
Collecting taxes from CTC is as easy as eating cadju nuts as the popular saying goes. One of the best organized companies in the country controlled by a multinational with a regional and global presence, it renders unto Caesar the things that are Caesar’s. Understandably, no doubt with the knowledge that it is in a controversial industry, CTC does not tire of publicizing its tax payments which are repeatedly stressed in its quarterly financial statements and annual reports. Every budget, with monotonous certainty, raises excise duties on alcohol and tobacco products. These taxes, often with an industry price increase added, are passed on to the consumer who pays more for his tot of arrack or cigarette as the case may be. Price increases usually depress consumption temporarily but sales pick up as time passes although available statistics show that where cigarettes are concerned the volume of sales, thankfully, is on a downward curve though CTC continues to prosper. The government hammering the legitimate cigarette industry with huge taxes results in a price deterrent on consumption and, no doubt, drives at least lowest end smokers to beedi. Similarly, the taxes on arrack must surely drive imbibers into the clutches of the kasippu mudalalis.
While beedis are not an industry as large as cigarettes, it generates more employment with published figures indicating that nearly 18,000 people are engaged in connected jobs. Against this, CTC employs a total workforce of just 1,426 of which 124 are direct factory employees. Beedis which are individually wrapped by hand is a labour intensive industry concentrated in the Kegalle and Mawanella areas as against the highly automated cigarette industry. In terms of size, the cigarette industry according to a Nielsen report generates an income of nearly Rs. 90 billion, most of which goes to government as taxes, while the beedi industry is worth Rs. 4.6 billion and hardly pays any tax. The major tax charge on beedis is customs duty on tendu leaves in which they are wrapped. Rs. 360 million was paid on this account in 2012 for which figures are available and around Rs. 22 million on the import of beedi tobacco. We do not know whether health-wise, smoking a beedi is less or more dangerous than smoking a cigarette. Visually a beedi is much slimmer and shorter than a cigarette and it may be assumed to contain less tobacco. But on the other hand, most cigarettes have filters that are claimed to remove at least a part of the harmful nicotine content.
There is no sense (or equity) in not including beedis in the health warning regulations. While the packs are far less ostentatious than cigarette packs, it is time that the authorities thought of getting beedi manufacturers to publish fairly prominently at least a simple health warning without insisting on graphics that cover 80 percent of the pack face. Importantly, beedis must also be taxed and government must rake its fair share of revenue from the product and ensure a price deterrent on consumers as in the case of cigarettes. President Sirisena, in his previous avatar as health minister, once went public with the claim that he could have made enough for generations if he soft-pedaled his campaign on graphic health warning. He did not offer details on who did what in this regard. Be that as it may, there has been pussy footing on taxing beedis with a perception that the industry commands some muscle thanks to the numbers it employs and political contacts. It was well known that the illegal `white’ cigarettes which paid no taxes but was freely available once-upon-a-time (though no longer) had a political godfather.
It is time the government used the tax stick on beedis too, may be less heavily than on cigarettes. Also the health warnings must be compulsorily displayed at points of sale of all tobacco products. Very few people can today afford to buy a packet of cigarettes and all but the affluent buy cigarettes by the stick. Thus the graphic warnings on packets will not be conveyed as powerfully to this class of smokers. Both the present president as well as successive governments must be congratulated for their efforts to make people desist from smoking. We do not know whether smoking is totally prohibited anywhere in the world but many countries have made it both more expensive and harder to persist with the bad habit. Meanwhile the beedi loophole here in Sri Lanka urgently needs plugging.
President Maithripala Sirisena, who as health minister in the Mahinda Rajapaksa administration took a special interest in ensuring that a powerful health warning that would hit smokers between their eyes, is carried on cigarette packets. He must surely be more than happy that he is finally having his way. While Sirisena wanted the graphic health warning to cover 80 percent of the front and back panels of cigarette packs, and gazetted regulations to that effect, the courts by a two to one split verdict held that 60 percent would be sufficient. It is now going to be 80 percent following legislation and no reasonable person would contest that decision. The information and evidence available conclusively establishes the incontrovertible fact that cigarettes are a killer and it is only the most stupid who will continue smoking. While it may be difficult for already addicted smokers to give up, the present efforts will certainly discourage young people from acquiring the self-destructing habit. So the present developments must be unanimously welcomed.
Having said that, we would like to return to a subject we have dwelt with before and ask why the money spinning beedi industry which flourishes in this country has been totally let off the hook as far as health warnings on their packaging is concerned. Apart from that, beedis are barely taxed. Successive government have over a long period of time been beating the cigarette industry with a price stick and today over 90 percent of the price that a smoker pays for a cigarette goes to the government as taxes. Neither prohibitive prices – each time a smoker lights up a popular brand of cigarette, he/she is literally burning 20 or 30 rupees – nor the increasingly tight regulations including chillingly graphical health warnings has driven Ceylon Tobacco Company PLC (CTC), the country’s only legal cigarette manufacturer, out of business. It continues to post super profits, pays its shareholders (the vast majority of who are foreign) fat dividends and its share price is among the highest among companies quoted on the Colombo Stock Exchange. The business continues to be most profitable both for British American Tobacco (BAT), the predominant shareholder of CTC, and for the Government of Sri Lanka which collects nearly Rs. 80 billion annually in taxes from the tobacco industry.
Collecting taxes from CTC is as easy as eating cadju nuts as the popular saying goes. One of the best organized companies in the country controlled by a multinational with a regional and global presence, it renders unto Caesar the things that are Caesar’s. Understandably, no doubt with the knowledge that it is in a controversial industry, CTC does not tire of publicizing its tax payments which are repeatedly stressed in its quarterly financial statements and annual reports. Every budget, with monotonous certainty, raises excise duties on alcohol and tobacco products. These taxes, often with an industry price increase added, are passed on to the consumer who pays more for his tot of arrack or cigarette as the case may be. Price increases usually depress consumption temporarily but sales pick up as time passes although available statistics show that where cigarettes are concerned the volume of sales, thankfully, is on a downward curve though CTC continues to prosper. The government hammering the legitimate cigarette industry with huge taxes results in a price deterrent on consumption and, no doubt, drives at least lowest end smokers to beedi. Similarly, the taxes on arrack must surely drive imbibers into the clutches of the kasippu mudalalis.
While beedis are not an industry as large as cigarettes, it generates more employment with published figures indicating that nearly 18,000 people are engaged in connected jobs. Against this, CTC employs a total workforce of just 1,426 of which 124 are direct factory employees. Beedis which are individually wrapped by hand is a labour intensive industry concentrated in the Kegalle and Mawanella areas as against the highly automated cigarette industry. In terms of size, the cigarette industry according to a Nielsen report generates an income of nearly Rs. 90 billion, most of which goes to government as taxes, while the beedi industry is worth Rs. 4.6 billion and hardly pays any tax. The major tax charge on beedis is customs duty on tendu leaves in which they are wrapped. Rs. 360 million was paid on this account in 2012 for which figures are available and around Rs. 22 million on the import of beedi tobacco. We do not know whether health-wise, smoking a beedi is less or more dangerous than smoking a cigarette. Visually a beedi is much slimmer and shorter than a cigarette and it may be assumed to contain less tobacco. But on the other hand, most cigarettes have filters that are claimed to remove at least a part of the harmful nicotine content.
There is no sense (or equity) in not including beedis in the health warning regulations. While the packs are far less ostentatious than cigarette packs, it is time that the authorities thought of getting beedi manufacturers to publish fairly prominently at least a simple health warning without insisting on graphics that cover 80 percent of the pack face. Importantly, beedis must also be taxed and government must rake its fair share of revenue from the product and ensure a price deterrent on consumers as in the case of cigarettes. President Sirisena, in his previous avatar as health minister, once went public with the claim that he could have made enough for generations if he soft-pedaled his campaign on graphic health warning. He did not offer details on who did what in this regard. Be that as it may, there has been pussy footing on taxing beedis with a perception that the industry commands some muscle thanks to the numbers it employs and political contacts. It was well known that the illegal `white’ cigarettes which paid no taxes but was freely available once-upon-a-time (though no longer) had a political godfather.
It is time the government used the tax stick on beedis too, may be less heavily than on cigarettes. Also the health warnings must be compulsorily displayed at points of sale of all tobacco products. Very few people can today afford to buy a packet of cigarettes and all but the affluent buy cigarettes by the stick. Thus the graphic warnings on packets will not be conveyed as powerfully to this class of smokers. Both the present president as well as successive governments must be congratulated for their efforts to make people desist from smoking. We do not know whether smoking is totally prohibited anywhere in the world but many countries have made it both more expensive and harder to persist with the bad habit. Meanwhile the beedi loophole here in Sri Lanka urgently needs plugging.
