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The nagging tobacco excise issue

With the commencement in implementation of the new excise duty on tobacco in June 2018, the tobacco industry has shifted from attack mode to subtle lobby for a rollback of the policy using the rhetoric that the tobacco industry is a stakeholder that should be engaged in tobacco control. Before this, in argument after argument the industry and its front groups, predicted armageddon as the only outcome of the new policy.

Nigerians were regaled with predictions of company shut downs, job losses, and increased smuggling rates, among other arguments that completely shunned the World Health Organisation (WHO) recommendation that tax and price measures generate significant government revenues for health and development work as well as protect people’s health from leading causes of death such as cancers and heart disease.

The tax issue was even painted as if Nigeria is the first country on the continent to implement such measures on tobacco. The truth however is that in the current scheme of things the policy on tobacco lags behind that of countries such as Algeria, South Africa and Gambia, that have in place 38.14 per cent, 36.52 per and 30 per cent excise duty respectively compared with Nigeria’s cumulative specific excise duty rate which is calculated at 23.2 per cent of the price of most sold brands.
Under the new excise duty, rates for tobacco in addition to the 20 per cent ad-valorem rate, each stick of cigarette will attract a N1 specific rate per stick (N20 per pack of 20 sticks) in 2018, N2 specific rate per stick (N40 per pack of 20 sticks) in 2019 and N2.90k specific rate per stick (N58 per pack of 20 sticks) in 2020.

Public health advocates believe that upping excise on tobacco will help reduce deaths from tobacco use. They equally contend that tobacco addiction goes with a plethora of often deadly illnesses for the smoker and non-smoker alike, and this has implications on the larger economy which often carries the burden of treatments and replacement of ill or demised skilled workers. The devastating impact of tobacco on the health of the individual is what the industry prefers we look away from.
But the federal government need not stop at the current increase. It is anticipated that in the near future further increase will be made to meet the WHO-recommended 75 % excise burden will largely discourage patrons of tobacco products, who are mostly the poor.

It is important to also re-echo the fact that health must always trump profits in government’s quest to improve public revenue and reboot the economy.
This is the right course since global studies have shown that tobacco use drives poor health, including cancers, cardiovascular disease, diabetes and chronic lung diseases. A recent review of the impact of taxes on tobacco use by over 100 experts concluded that “Significant increases in tobacco taxes are a highly effective tobacco control strategy and lead to significant improvements in public health.”

In as much as calls that taxes should be lowered for local producers in the beverage sector to safeguard jobs and keep factories running is acceptable, for tobacco, lowering taxes would mean more disease, death, leading ultimately to a health burden on government and individual families.
The Nigerian government need not however stop with the new tariffs on tobacco which is a mere 16.4 % excise burden compared with countries such as Ghana which has a 175% excise burden on tobacco or Senegal and Gabon that have 45 % and 32 % respectively.

In the Nigerian case, tax increase is only one among a host of policies that can reduce the tobacco burden. Government must align this with others, including enforcement of the National Tobacco Control Act, 2015 and depositing the instrument of ratification of the protocol to eliminate illicit tobacco. Unfortunately, government is still foot-dragging at the enormous cost of lives.

Alimi Johnson lives in Ilorin

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