Fresh Appeal for Tobacco Tax Hike

Fresh Appeal for Tobacco Tax Hike  Fresh Appeal for Tobacco Tax Hike

Increasing the retail prices on cigarettes by 42% will reduce the world’s smoking population by 66 million, and cause a 15% reduction in global deaths according to the World Bank, Mohammad Reza Masjedi, secretary general of Iran’s Anti-Tobacco Association, said on Sunday.

The UN General Assembly meeting last September reiterated that all countries are committed to take measures to implement the global Framework Convention on Tobacco Control (FCTC) which stipulates taxes should comprise at least 70% of the retail price on each cigarette pack, he said, Mehr News Agency reported.

Currently, in Iran the tax on cigarettes is a paltry 3% of the cost price, while VAT on tobacco products is 12%.

In June 2014, Behzad Valizadeh, a senior official at the Iranian Tobacco Company, announced that the Majlis (parliament), for the first time in six years, had raised retail tax on imported, joint venture and domestically produced cigarettes by 20, 30, and 40%, respectively.

However, it does not seem to be implemented or directed at the Iranian Tobacco Company (ITC) or the Ministry of Industries, Mines, and Trade as the prices on cigarette packs remained unchanged across the retail outlets, the Persian-language daily ‘Etemad’ reported at the time.

“The Majlis is reportedly contemplating increasing the prices on imported, joint venture and domestically produced cigarettes by 19%, 12% and 40%, respectively,” said Mohammad Hosein Barkhordar, CEO of the Iranian Tobacco Company, as reported by IRNA on Monday.

But Barkhordar believes that if the legislation is passed, it will give rise to smuggling. “Increasing prices with the aim of reducing smoking has earlier proved futile,” he maintained.

The tobacco company has a monopoly and controls all tobacco-related activities in Iran, although global players have significant shares. British American Tobacco and Japan Tobacco were the leading global players in Iran in 2014, with a combined volume share much higher than ITC. Thanks to agreements between ITC and the global manufacturers, the latter had a better chance of expanding their business in Iran as import procedures were eased. They also used ITC facilities for the domestic production of their own products, according to

  Top Consumer

In May 2014, the World Health Organization warned in a report that within the next 40 years Egypt, Iran, and Pakistan would be the top growth countries with respect to tobacco consumption worldwide. The Eastern Mediterranean region has the second lowest average for cigarette prices.

Smoking prevalence has reached as high as 50% among young males and females aged 13–15 years in Iran as well as certain countries in the region, while the increasing waterpipe (hookah) consumption has placed the Eastern Mediterranean region second globally in male tobacco use, following the Western Pacific, the report said.

“In some countries a cigarette pack can be sold for less than one US dollar,” the report cited Dr. Alwan, WHO Regional Director for the Eastern Mediterranean as saying. That statement still holds true in Iran.

Higher taxes on tobacco will raise more revenue for governments and health programs; reduce the number of smokers, cut avoidable diseases, increase economic productivity and lead to healthier communities and healthier economies. This is the simple logic behind one of the United Nations’ key strategies for financing the post-2015 Sustainable Development Goals (SDGs).

  Win-Win Situation

“Steep taxes on cigarettes and tobacco products will be a win-win situation for an individual, their family, as well as societies, particularly in the developing countries,” Masjedi said.

Tobacco tax hike can also help states to fund more public health programs and achieve higher sustainable development status.

“Iran was among the first countries to join the FCTC (in 2006) that also obliges governments to adhere to the relevant provisions and action plans,” he noted.

Masjedi stressed that immediate action to raise taxes on tobacco by up to 70 or 75% will not only help reduce consumption and demand, but also cut government’s healthcare costs on tobacco consumption.

A visiting delegation from WHO led by Dr. Vera Luiza da Costa e Silva, head of WHO’s secretariat of the FCTC, in January, censured Iran’s inaction regarding implementing Article 6 of the convention which calls for raising tobacco tax.

Meanwhile, the Food and Drug Administration (FDA) is following up on the Health Ministry’s proposal made to the Majlis to raise taxes on tobacco. So far, the special commission in this regard has not agreed to do so.

Opponents argue that implementing Article 6 of the FCTC would take a toll on domestic tobacco production and give rise to smuggling, and that it cannot necessarily ensure a drop in consumption. But many countries including France, Philippines and Turkey have successfully introduced stringent tobacco tax policies that have reduced its use without leading to an increase in smuggling.

  High Number of Deaths

Every year, more than 33,000 people in Iran are killed by tobacco-related diseases, while more than 81,000 youth and over 7.36 million adults continue to use tobacco daily.

For less than 2,400 rials (6 cents) per person per year, Iran will be able to pay for the four ‘best buys’ in tobacco control policy, raising tobacco excise taxes, enforcing a comprehensive national smoke-free law and a ban on tobacco advertising and promotion, and mandating large graphic warning labels appear on tobacco product packaging, reported the WHO as stating. This small investment will reap enormous dividends in health and prosperity.