AN international researcher contracted by government to analyse the impact tobacco taxation would have on the economy, said on Friday that last week’s tax increase on cigarettes stands to benefit consumer health as well as the public purse.

“For both the ministries of health and finance it is a win-win situation. There are no losers. It’s not a case that some ministry is going to benefit at the expense of another one,” said Dr Corne van Walbeek, an international tobacco researcher from the International Research Centre in South Africa.

He was discussing the findings of a report entitled: ‘The Economics of Tobacco Control in Jamaica: Will the pursuit of Public Health Place a Fiscal Burden on Government’, at a public forum held at the Jamaica Pegasus Hotel on Friday.

The forum was attended by staff of the ministries of health and finance and representatives from the Jamaica Coalition for Tobacco Control, the National Council on Drug Abuse and the general public.

The study was commissioned by the Jamaican government which has been working towards ratification of the World Health Organisation’s (WHO) Framework Convention on Tobacco Control.

Van Walbeek said that since the early 1990s there was a fairly consistent increase in the real price of cigarettes locally, caused largely by an increase in the taxes. This also resulted in a reduction in cigarette consumption.

“Consumption does respond to a change in the price. If there is going to be a one per cent increase in the price then there is going to be a less than one per cent decrease in the quantity. This is not rocket science and this is not unique.

This is very typical of developed and developing countries,” said van Walbeek.

His presentation followed last Thursday’s announcement by Finance Minister Omar Davies of an increase in the Specific Consumption Tax on cigarettes, as part of a $9.3-billion tax package for 2005/6.

Davies’ announcement was followed on Friday with news from cigarette manufacturer and distributor, the Carreras Group Limited, that it would, as a consequence, increase the retail price of its popular brands, including Craven A and Matterhorn.

According to van Walbeek, the European Union set 57 per cent as their minimum tax burden on cigarettes, but the Jamaican Government has only increased its total tax burden from 52 per cent to 54 per cent. The two percentage difference translates to a roughly eight per cent increase in cigarette tax revenue for government, he said. He said, however, that if the government had increased the total tax levy to 57 per cent, in keeping with WHO recommendations, it would mean 15 per cent in additional cigarette tax revenue for the country. But a total tax levy of between 72 per cent and 75 per cent would result in a definite decline in government revenue as there would be a drop in sales, he said.

“Where does one start killing the goose that lays the golden egg? The goose starts dying at approximately 72/75 per cent of excise tax. It is obviously clear that despite the moves of yesterday (Thursday) we are not nearly at that point where it’s going to turn against the government in terms of a reduction of revenue,” van Walbeek said.

Put in dollar terms, the eight per cent increase means an average increase of $20 per pack of cigarettes, however, according to van Walbeek, based on the Carreras Group’s announcement, the retailers have effectively increased their price by approximately $40 per pack.

“In other words, the retailer is making more profit per pack of cigarette than the past.

“We find now that the price of cigarettes has now increased from $10 to $12 per single stick and some people are going to find now it’s becoming too expensive, so if it’s too expensive for them they are going to consider cutting back or quit.”

This has been the ultimate aim of the Ministry of Health which, in keeping with the WHO convention, has been working to reduce tobacco consumption in Jamaica and has implemented other control measures, besides taxation, such as banning all forms of advertising and pushing for a ‘smoke free’ environment in the hospitals, workplaces, schools, public transportation, airports and seaports. There is also a health warning on cigarettes.

Tobacco contains more than 40 cancer-causing chemicals and other toxins which may affect non- smokers as well as smokers. About four million persons die annually from illnesses caused by tobacco smoking.

A Global Youth Tobacco Survey done in 2000 revealed that 33.8 per cent of students interviewed admitted to smoking cigarettes at least once; 15.2 per cent were current smokers and 25 per cent of child smokers started their habit before age 10.

Director of National Council on Drug Abuse Michael Tucker, who gave details of the study highlighted the fact that cigarettes were easily accessible to Jamaican children and that retailers do not discriminate according to the age of the buyer when selling their products.

“Young people vastly underestimate the addictiveness of nicotine,” he said. “There’s need for more public education (as) 70 per cent of smokers want to quit but only one in three succeed before age 65.”