Government efforts spanning over a period of more than a year to check the hazards of smoking and curb the trend among juveniles have been well appreciated as a good beginning by social and health sector activists. These steps include a series of legislations that make the selling of cigarettes to juveniles a crime punishable by fine and imprisonment.
One crucial aspect that however has been missing in the strategy is to introduce some fiscal measures to ensure that cigarettes are priced in a manner that they become unaffordable for most juveniles. In most of the Western world, the fiscal strategy is given precedence over other steps for discouraging juvenile smoking. But we seem to have fallen into a vicious circle where a large unregulated manufacturing sector supplies cheap cigarettes in the market.
Government measures over the last few years have primarily been focused at gaining cooperation from the two larger cigarette manufacturers, as these were found willing to follow the guidelines set by the government. However, the illegitimate sector that manufactures cheap brands using sub-standard tobacco as raw material, is able to evade excise duty on the products and flood the market with cheap cigarettes. Cigarettes available in the market for as low as Rs5.50 to Rs6.00 for a packet of 20, needless to say, counter the initiatives taken to discourage juvenile smoking.
The legitimate tobacco companies have supplemented the efforts of the government by withdrawing from electronic advertising and taking voluntary measures for prohibiting under-age sale of tobacco. The illegitimate sector, on the other hand, is largely unregulated and continues to play havoc with public health, in general, and youth, in particular, with no checks and balances.
The intricacies of the debate on health hazards of smoking are too complex to be addressed here. Suffice to say that even if the principle of ‘adult choice’ is accepted, as tobacco companies would like us to believe, there is no justification for easy availability of tobacco products for juveniles. Juvenile smoking has seen an alarming rise for the past few years. To add fuel to the fire the availability of cheap, fake and substandard brands for youth consumption has just worsened the situation.
The fact that cheap and sub-standard brands of cigarettes are dumped in the market at throwaway prices has made the sticks easily accessible and affordable to children and youth especially in the lower income sections of the society. Most of these youngsters work as the only breadwinners of poor families thus creating another kind of social impact because of cheap cigarette availability.
Tobacco companies across the globe follow the International Marketing Standards, which are set as a minimum for the responsible promotion of tobacco, and in particular they have been constructed to ensure that no marketing activity is directed at or appeals to the youth (those under 18 years of age). The legitimate tobacco sector in our country have started to follow these standards, but sadly the illegitimate sector has gone unchecked so far.
The large tax-evading activity going on is a reflection that either law-enforcement agencies are not well equipped or lack the will to take cognizance of the illegal activity. The political clout of the tax-evaders in the tobacco industry is also seen as a major factor hampering any positive action on the part of the government.
The two major players and legitimate manufacturers in the local tobacco industry share between them around 50 billion sticks’ production, while a number of illegal manufacturers who evade taxes and produce cheap cigarettes fill the market with around 14 billion sticks, becoming the third major player in the local tobacco market.
Previously the area of concentration for counterfeiting and evasion was mostly in the NWFP, but the tax-evading manufacturers have now repositioned their operations in Azad Jammu and Kashmir, Chakwal and Bhawalnagar districts of Punjab.
The menace of tax evasion is not only hurting government revenue, but also affecting the competitiveness and level-playing environment of the local market as well. In general, a look at the economic scene in reference to this situation reveals that the multinationals and legitimate stakeholders are really faced with a dilemma. In fact, insiders have claimed that these manufacturers have made offers to the government that if the illegitimate sector is checked, they would like to further increase the price of their own products. A proper pricing strategy in consultation with major players could thus promote the cause of the Ministry of Health to discourage smoking throughout the country.
As far as limiting or curbing the health impacts of cheap cigarettes is concerned, the government introduced some changes in the Excise Law in the 2003-04 budget, enabling the Central Board of Revenue to fix the minimum price of any goods or class of goods for charging excise duty. The Central Board of Revenue can thus fix the minimum retail price of cigarettes under the said law to bring tax-evading cigarette manufacturers into the tax net, and discourage dumping of cheap cigarettes in the market. This single step can be much more effective than the cumulative effects of the all other steps taken to discourage juvenile smoking.
