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Hiking tobacco tariffs to discourage smoking called into question

A record 200 percent import duty hike in 2012 failed to reduce demand and the number of cigarettes imported to the Maldives increased to 497 million in 2016 from 460 million the previous year despite a further hike in April 2015 that jacked up prices to MVR48 a pack.



The effectiveness of hiking tobacco tariffs to discourage smoking was called into question Thursday when a parliamentary committee consulted customs and health officials about a proposed import duty hike for cigarettes.

Commencing its review of the government-sponsored amendments to the import-export law, the economic affairs committee invited senior officials from the Maldives Customs Service, the Health Protection Agency, and the Tobacco Control Board to share their views.

Customs officials told MPs that the number of cigarettes imported to the Maldives increased to 497 million in 2016 from 460 million the previous year despite an import duty hike in April 2015 that jacked up prices from MVR38 (US $2.47) to MVR48 (US$3.11) a pack.

The government’s proposal to hike import duty from MVR1.25 to MVR2 per cigarette would increase the price to about MVR70 (US$4.5) a pack.

Asked about the unchecked rise in consumption, Hassan Mohamed, HPA deputy director and representative to the Tobacco Control Board, argued that raising tariffs alone is ineffective without a multi-pronged approach to help smokers quit and discourage others from picking up the addictive habit.

Several smokers wanted to stop when prices shot up from MVR15 (US$1) to MVR35 (US$2.2) a pack after a record 200 percent import duty hike in 2012, he said.

But the health sector failed to “lend an adequate hand” with “cessation services, a quit helpline, or awareness programmes.”

Stressing the importance of banning the sale of loose or single cigarettes – which also enables minors to begin smoking – Hassan questioned the effectiveness of the proposed 66 percent hike since the price increase in 2012 from MVR1 to MVR2.50 per cigarette did not reduce demand.

After the next import duty hike from MVR90 laari to MVR1.25 per cigarette in 2015, he noted that some shops began selling for MVR3 per cigarette but were soon forced to offer the same price as others when the market price settled at MVR2.50.

He also noted as a caveat that increasing tourist arrivals and the expatriate workforce contribute to the growth in cigarette imports.

Dr Aishath Rameela, state minister of health, meanwhile revealed that “there is not a single cent for [health] promotion” left in the HPA’s record-low MVR3.5 million (US$227,000) budget for 2017, which was down from MVR24 million (US$1.5 million) last year.

“After buying vaccines for children and medicine for TB, HIV, and leprosy patients, we have already exceeded this year’s budget,” said Dr Rameela, who is in charge of the HPA.

She also noted that a public health fund required by a 2012 law has yet to be “functionalised”.

Other HPA officials also bemoaned the lack of funds to conduct effective anti-smoking campaigns, pointing out that Philip Morris spends US$2.3 billion a year on marketing.

A 2011 survey found that 38 percent of men and 3.4 percent of women in the Maldives are smokers. According to the health ministry, cardiovascular diseases, chronic respiratory diseases, and cancers are now among the leading causes of death in the country.

The HPA officials stressed that cigarettes are “a cancer-causing agent with more than 70 [hazardous] elements”.

Seizing on the lack of funds for health promotion, opposition MPs Fayyaz Ismail and Eva Abdulla meanwhile challenged the insistence of ruling party lawmakers on the committee that the government’s aim with the tariff hikes is to promote public health, which was also the stated purpose of the bill.

The import duty hike was among a raft of revenue-raising measures proposed in the 2017 budget to raise MVR200 million (US$13 million) in additional income.

According to customs officials, MVR622 million (US$40 million) was collected as import duties from cigarettes last year.

As the government could earn nearly MVR1 billion (US$64.8 million) by raising the tariff, Fayyaz said he would propose earmarking ten percent to fund health promotion programmes.

The government also proposed hiking import duties for soft drinks and energy drinks to MVR4.60 per litre, which is expected to generate MVR9 million (US$583,657).

MPs voted 50-9 with three abstentions at Tuesday’s sitting of parliament to move ahead with the import duty amendments.

Majority Leader Ahmed Nihan had caused a stir during Tuesday’s debate when he said that a cigarette pack should cost as much as MVR100 (US$6.5) or MVR200 (US$13).

Hassan Mohamed concurred that the price hike should be substantial to disincentivise smokers, dissuade potential beginners, and restrict access to children.

Dr Razana Faiz from the HPA meanwhile warned that tobacco companies are now targeting children.

Anonymous studies conducted in Maldivian schools found that 80 percent of minors who smoke buy cigarettes from shops, she said.

Children as young as nine have started smoking after an adult offered them a cigarette, she added.

Tobacco companies have also been including nicotine in other products such as supari, a confection made of crushed betel nuts that is very popular among Maldivian youth.

“Once you get small doses of nicotine, your brain is getting little by little addicted to nicotine. Today it’s supari, but next year they will buy cigarettes because it’s really a biological process,” she said.