Cigarette distributor, Carreras anticipates a public smoking ban next year but it won’t come with new taxes–which offers investors a mixed outlook.

“A ban of smoking in closed public places as well as restrictions in our ability to advertise and promote our brands are expected to be the most significant elements of any tobacco control legislation. It is expected that by early 2011 such legislation would be enacted,” chairman Christopher Burton yesterday at Carreras’ annual general meeting at the Wyndham Hotel in Kingston.

Burton expressed mixed views in regard to a public smoking ban: “Smoking in public areas is a measure taken in many areas there has to be a balance to provide smoke free environment. But a balanced approach that is what we would be in favour of”.

Burton expects the financial impact to be minimal as most of the proposed measures were already self-imposed by group and its UK based parent British Tobacco.

“We have been observing these measures already and we would not be seeing any major impact on our business,” Burton explained but added a caveat of government not imposing “draconian” measures.

Extreme measures he said included regulation to sell cigarettes that are non-branded, hidden from display and warning signs larger than the label. Based on ongoing dialogue with government Carreras doesn’t expect draconian measures to be implemented.

In the mid 2000s, the Government signed and ratified the Framework Convention on Tobacco Control (FCTC), and “has been under increasing pressure, particularly in recent times, to enact some form of tobacco control legislation in keeping with its FCTC obligations”, according to Carreras in its 2010 annual report.

Trinidad & Tobago enacted legislation in February which at first glance resembles the convention that currently obtains in Jamaica. The Tobacco Control Act states that “no person shall smoke or hold a lighted tobacco product in any enclosed public place”, among other designated areas, making it illegal to smoke in the many bars and clubs that dot the island’s landscape.

Burton does not anticipate new taxes based on the International Monetary Fund’s (IMF) public recommendations to government that the economy’s taxable limit was reached. “The company does not anticipate further taxation this year or next year based on the IMF statement in June,” he said later adding. “Our major impact on business is excessive taxation. And what happens to the consumers disposable income.”

Taxation has hurt the company’s growth in profitability. In just three years, the Government increased the specific tax on cigarettes by 450 per cent – from $2.30 a stick in March 2007 to $10.50 in January of this year — which positions the cigarette business to generate some $11 billion, or approximately four per cent of the tax revenue for the Government in the 2010/11 fiscal year.

The tax increases have translated into lower sales for Carreras, with the company seeing a 27.5 per cent decline in volumes during its financial year that ended March 31, 2010 – a decline which outweighs increase in revenue such that overall gross operating revenue fell by 4.9 per cent.