The National Council of Smoking (NCAS), together with #protectournext health organisation partners the Cancer Association of South Africa (CANSA), the South African Medical Research Council (SAMRC) and the Heart and Stroke Foundation SA (HSFSA), have again called upon Minister Mboweni to impose a 100% tobacco tax increase, saying that there are compelling reasons to increase cigarette taxes from the current R17,40 to R34,80 (per pack of 20 cigarettes).
“In the face of the devastating health and economic effects of the Covid-19 pandemic, tobacco taxes are an under-utilised way to improve the health of the people and to reduce the pressure on the public purse,” says Dr Sharon Nyatsanza of NCAS. “Cigarettes are still far too affordable, and small negligible increases will not change smoking behaviours that add to the burden of tobacco on our society.”
The World Health Organisation (WHO) recommends that tobacco taxes should be at least 75% of the retail prices to realise the significant opportunities for improving health. In South Africa, tobacco tax rates sit at 56%, substantially below the WHO’s recommendation.
Lorraine Govender of CANSA says, “Tobacco taxes are the best way to decrease tobacco use, the primary risk factor for lung cancer. According to The Tobacco Atlas, high taxes that make tobacco less affordable reduce tobacco initiation and consumption.”
Tobacco use and exposure to second-hand smoke causes and worsens countless diseases, killing 115 South Africans daily. Making these deadly products less affordable is proven to improve health outcomes for individuals and communities. Prof Pamela Naidoo of the HSFSA says, “There is undisputed evidence of harms that tobacco causes on health outcomes. Moreover, tobacco smoking increases air pollution. The HSFSA, therefore, supports a 100% Tobacco Tax increase.”
Dr Catherine Egbe Specialist Scientist: Alcohol, Tobacco and Other Drug Research Unit of the SAMRC says, “Evidence from multiple countries shows that lower-income households and adolescents are most sensitive to price increases and do change their smoking behaviour over time. Higher prices can also reduce relapse among those who have quit and reduce consumption among continuing users,” says
In a local study, the University of Cape Town’s Research Unit on the Economics of Excisable Products (REEP) reported that one of the main reasons cited by smokers for trying to stop smoking during the temporary ban on tobacco sales during the pandemic lockdowns in 2020 was the price increases. “The REEP study confirms the key role price increases play in reducing smoking over time. A 100% tax increase will result in a permanent increase in tobacco prices and will reduce smoking rates more than a temporary increase,” explains Nyatsanza.
Another REEP study shows that the estimated cost of tobacco use to the country is R42 billion rand in healthcare costs, days and lives lost as a result of tobacco-related illnesses. However, less than R14 billion was collected in the 2019-2020 tax year, effectively leaving a deficit of R28 billion to be subsidized by the taxpayer. A substantial tax increase will offset this deficit, says Nyatsanza. “A 100% tax increase will also provide much-needed revenue for the Treasury, especially during this time of multiple demands on state resources. Additional revenue could go to healthcare, education, social grants or any other urgent social welfare issues, reducing the burden which is currently borne by ordinary taxpayers.”
Although the tobacco industry consistently uses the illicit trade argument to oppose tax increases, Nyatsanza says the tax level is not the underlying cause of illicit trade and should not be cited as the underlying reason to impose insignificant tax increases. “The devastating health effects of tobacco must be the decisive factor. Illicit trade must be dealt with through law enforcement mechanisms, as the Treasury itself noted, and by the ratification of the Protocol to Eliminate Illicit Trade in Tobacco Products which will provide powerful tools to combat illicit trade.”
The #protectournext organisations further believe novel tobacco products and e-cigarettes should be subject to the same excise taxes as cigarettes. Heated tobacco products are now taxed at a substantially lower rate than cigarettes. E-cigarettes are due to be taxed from this year, although details have not yet been confirmed. “While e-cigarettes do not contain tobacco, they do contain addictive nicotine or other harmful chemicals,” says Dr. Egbe. “These addictive products must to be better taxed and regulated.”
“Evidence shows that policy change, tax increases and better support delivered through a whole-of-government approach are the most effective ways to stop ongoing tobacco harm,” concludes Nyatsanza. “The Department of Finance and the South African Revenue Service should play their part in protecting our nation.”