Alex Kremer: “There is only one explanation when someone opposes to increasing excise duties on tobacco. That person is dependent on the industry’s lobbyists”

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20 decembrie, 2016, 10:44

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Alex Kremer, World Bank Country Manager in Moldova

Both of my grandfathers smoked since they were young. The grandfather on my father’s side smoked pipe, and the grandfather on my mother’s side was a farmer and smoked cigarettes. Both died young and left my grandmothers widowed. My father grew up in an atmosphere where he constantly inhaled pipe smokes. As a result, he suffered from asthma all his life. My mother studied medicine, specializing in cancer, and she constantly told us, my brother and me, not to smoke, because every day at work she saw what smoking did to her patients.

In Moldova, 87% of deaths are attributed to tobacco-related diseases. I’m not saying that tobacco causes all these 87% of deaths, but they are due to non-communicable diseases for which tobacco is a major factor. Also, 43% of men in the country smoke, as well as 5% of women. The thing that has been worrying us lately is the increasing number of women who smoke. It is interesting that very many Moldovans start smoking in their youth, even childhood. 30% of children from 8^th, 9^th grade already started smoking or tried smoking cigarettes at least once. They can do it because it is very accessible. It can’t be cheaper than that. It costs as little as a bottle of coke or a chocolate. Sometimes it is cheaper to buy cigarettes. I know these things, because my children come here on vacation from the UK, and when they go back, they try to load their luggage with cigarettes, because they know they can sell them to school colleagues and earn money, and I have to stop them from it. It shows how attractive smoking in Moldova is for young people. We can discourage these dangerous habits by offering much more expensive cigarettes. More expensive especially for those who are thinking to start smoking. Smoking costs between 5% and 10% of the budget for health. These are our estimates. These expenses are related to diseases caused by smoking. We at the World Bank examined several scenarios regarding benefits for revenue. If these recommendations are implemented, additional tax revenues could be collected.

We are speaking about a potential reform of tax increase for cigarettes that could help reduce expenses on health. By this, we will protect the lives of our children and grandchildren. I had been thinking why anyone would vote against increasing taxes on cigarettes, and I found three reasons. The first is that there is a fear of political consequences that might come from the tax increase. That is why there may be some political resistance. But every one of those who can see that the political “price” of tobacco tax increase is too high, should be able to answer this question: Can we find another solution to increase the share of revenue from taxes in the GDP? Politically, it is difficult. The income tax, the VAT or the tax for economic agents needs to be increased. But these measures are more difficult than tobacco tax increase.

The second reason why anyone would oppose tax increase is fear of smuggling. We know what smuggling is. We know that cigarettes in Moldova often come from the East, through Transnistria. Two, three years ago this argument would have been convincing. In recent years, however, Moldova and Ukraine managed to achieve significant progress in terms of cross-border cooperation, and now they have administrative and supervisory tools that don’t allow it. If there is political will, this argument is not convincing.

There is a single reason why anyone could oppose tobacco tax increase. It could be because that person is dependent on tobacco industry lobbyists. There is only one source of resistance to tobacco tax increase – the tobacco industry. I believe that anyone who opposes these tobacco tax increases should ask themselves why they do it and whether they have evidence that could explain to people why they oppose so much.