High Tobacco Duty a means to protect societal health

The recent revelation by overseas press that at least one leading tobacco manufacturer is accused of encouraging or even relying on cigarette smuggling to extend its "influences" in developing countries has fuelled furore. Such information is revealed from the heaps of internal documents the company is required to make public as part of a settlement of litigation in the United States over health cost. 

At the same time, in Hong Kong, with the Government Budget forthcoming, tobacco giants are mounting their call for reducing tobacco duty. They have repeatedly stressed that the high duty, hence the high price, of cigarette is responsible for surge in cigarette smuggling. Official data shown an annual 80% rise in smuggled cigarettes in 1999.

Ironically, the loudest voice comes from the local representatives of the same leading company being accused of conniving smuggling overseas. 

What is most worrying is that tobacco giants seemed to have earned the ears of our top officials. In his Budget speech last year, the Financial Secretary said: "increasing tobacco duty will only enhance the attractiveness of contraband cigarettes and provide further impetus to smuggling and illegal sale. It would be counter-productive in revenue terms and would contribute little to furthering our anti-smoking policy." 

Such amounts to putting the cart before the horse. Surging criminal activities should be combated with strengthened law enforcement; never by lowering the legal requirements. 

Overseas experience has proven that price hikes of cigarette are very effective means of reducing tobacco consumption, in particular amongst youngsters. Succumbed to tobacco industry's claim against high duty, Canada lowered its tobacco duty in 1993. Painfully, the country has suffered from surge in tobacco consumption ever since. Canadian government thus needs to reinstate higher duties; and has launched a $1 billion lawsuit against some tobacco companies for, amongst others, contributing to a smuggling problem that led to revenue reduction in 1994. 

Our Government is well advised to take heed of such vivid yet painful experience of others. 

Instead of diluting the tobacco duty collected into the general revenue, our Government could come up with more innovative ideas. 

In some countries, tobacco duties are designated to compensate for the surging health cost burden onto government due to smoking related diseases. 

In 1996 alone, Hospital Authority statistics had indicated that it cost taxpayers $635 million in treating patients of lung cancer, bronchitis emphysema and ischaemic heart disease only -- the three common diseases caused by smoking. Academics estimated that taking into account of other smoking related diseases, as well as the social cost like affect on workforce productivity, the cost would be close to $3-4 billion a year. 

In other countries, levies from tobacco sales are designated for sponsoring sports and cultural activities. 

Amidst the heated discussion over banning tobacco advertisements in the past years, tobacco giants had exerted the scare-mongering predictions that our sports and cultural activities would hardly survive upon kissing goodbye to their huge sponsorships.

This only indicates the hypocrisy of the industry. If they are sincere in promoting sports and culture for the benefit of the society, why do sponsorships necessarily need to come with fanfares in promoting the addictive habit? After all, there is no law banning sponsorship by any company or trade. 

Fortunately, history speaks for itself. The positions of tobacco companies in advertising business and sport and cultural sponsorships have been quickly taken up by other products. 

Our officials should have the vision not just to eye on the dollar sign, but the overall benefit and health of our society. After all, investment in health must be an excellent investment in productivity enhancement and well being of this generation and beyond. 

(Hongkong Standard, 12 Feb 2000)