Despite all the sound and fury surrounding tough new legislation on smoking, Finance Minister Trevor Manuel has emerged as the unlikely hero of the drive to reduce smoking in SA.
Public hearings have so far focused on the prohibition of tobacco advertising, tough new rules that will further restrict where people may smoke and a call for further restrictions on the industry.
South Africa: Taxes Not Laws Stamp Out Smoking, MPs Told - Business Day (Johannesburg)
February 1, 2007
Wyndham Hartley
Johannesburg
Despite all the sound and fury surrounding tough new legislation on smoking, Finance Minister Trevor Manuel has emerged as the unlikely hero of the drive to reduce smoking in SA.
Public hearings have so far focused on the prohibition of tobacco advertising, tough new rules that will further restrict where people may smoke and a call for further restrictions on the industry.
A Cape Town economist has attributed the main cause of reduction in tobacco consumption to consistent increases in price.
University of Cape Town economist Evan Blecher told Parliament's health committee yesterday that, contrary to all the forecasts from the tobacco industry, tougher control laws had not had a negative economic impact.
In fact, the effect for tobacco companies was positive because all their revenues and profits were up.
This was also positive from a consumer point of view because fewer people were smoking and nowhere could it be argued that smoking was healthy, Blecher said.
He said that the first control legislation arrived in 1993 and for the next six years, until the law was made even stricter, the price of tobacco products almost doubled.
Total sales fell 25% and the total number of cigarettes smoked dropped 30%.
Advertising bans were introduced after 1999, but Blecher said one of the most effective tools had not been advertising bans or smoke-free areas. "The primary tool in reducing tobacco consumption" was excise taxes, he said.
Since becoming finance minister Manuel has strongly implemented the policy that excise taxes should amount to half of the retail price of tobacco products.
Blecher explained that in 1993 -- before the first control act -- excise revenue on tobacco products was at its lowest level in 30 years.
Also the share of the retail price that went to the producers was at its highest level ever, at 75%.
He said that since 1993, the price had trebled and the amount of excise tax collected from the industry increased to R4bn.
"It is all about consumption and prices. Dramatic changes in consumption occur as the price rises. Put the price up and people buy less, it is that simple."
Blecher said cigarette price rises were not due to Manuel alone; the industry had also increased its prices. Claims from the industry that the increases were solely due to tax were not true.
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