[Intl-tobacco] Poor Nations Should Raise Taxes on Cigarettes, World Bank Says (fwd)

[Robert Weissman]

Poor Nations Should Raise Taxes on Cigarettes, World Bank Says
by Mark Drajem
Source: Bloomberg News, Thursday, 8/3/00

Washington, Aug. 3 (Bloomberg) -- The World Bank and World Health
Organization will call on developing nations to raise cigarette taxes to
thwart a bid by tobacco companies to win new markets among the poor, the
head of the bank's anti-smoking campaign said.

The recommendation is contained in a report by the two agencies to be
released next week, in what will be the latest broadside against the
global tobacco industry.

``Tobacco companies are just looking for new markets,'' Joy de Beyer, the
World Bank's tobacco control coordinator who helped write the report, told
Bloomberg in an interview. ``Unfortunately, their products cause death.''

With the rise in lawsuits and regulations against Philip Morris Cos.,
British American Tobacco Plc and other companies in the U.S. and other
rich nations, cigarette makers are increasingly looking to developing
countries, especially in Asia and the former Soviet Union, as a new
revenue source.

That's sparked a counterattack from activists and international
organizations.  Yesterday, a separate World Health Organization report
accused tobacco companies of deliberately subverting that agency's work.

Since 1998 the health organization has led the charge against smoking in
poor countries, and WHO head Gro Harlem Brundtland now wants a new global
treaty on smoking to impose tough limits on tobacco advertising and
marketing.

U.S. companies, which government figures show export $5 billion a year of
tobacco products, have agreed to legal settlements totaling $246 billion
to help states recoup money spent treating sick smokers. The agreements
also banned certain marketing practices, such as using cartoon characters
in advertising.

No New Taxes

Philip Morris, the world's largest tobacco company, and other producers
have said they have taken measures to make known the health effects of
their products, and shouldn't be hit by new taxes or lawsuits.

``Philip Morris has done almost all of the things, and then some, that
people have demanded of them,'' said William Ohlemeyer, general counsel to
the company, at a press conference last month. ``The one thing we haven't
done is stop selling cigarettes.''

WHO estimates that 4 million people die every year from the effects of
smoking, a figure expected to rise to about 10 million within the next 30
years. Seven in 10 of those deaths will occur in poor countries, according
to WHO.

Research shows that smoking in developing countries of Asia and Africa is
increasing, while its popularity wanes in the U.S. and Europe. Four in
five of the 1.1 billion smokers live in developing countries.

3-Year Effort

The new report, ``Tobacco Control in Developing Countries,'' is the
culmination of a joint three-year, research effort by WHO and the World
Bank. Many of the conclusions were released in a shorter format last year.

The study will conclude that if the cost of smoking is higher, people will
consume fewer cigarettes, de Beyer said.

``One thing all economists know is that at high prices, people will buy
less,'' de Beyer said. ``It holds true for tobacco as well as for anything
else.''

And the best way to raise prices is to raise taxes, she said. The report
will show that a 10 percent tax will reduce consumption by high-income
smokers by 4 percent, and for low income smokers by as much as 8 percent,
she said.

``This is one of the few ways you can fight a health problem while raising
revenues, not spending money,'' said John Banzhaf, executive director of
the U.S. office of Action on Smoking and Health, an anti-smoking advocacy
group.

``People with lower incomes and younger people really tend to be quite
price-sensitive,'' de Beyer said. It's those people who are the most hurt
by smoking, as well as the hardest to reach by anti-smoking campaigns.

Smuggling

At the same time, however, higher taxes are an incentive to smuggle, de
Beyer acknowledged. Yet higher taxes are just one reason for increased
smuggling, far behind a country's tolerance for corruption, she said the
report will show.

``The stiffer a country's actions against smuggling, the less it will be a
problem,'' she said.

Recent reports from activists and others, using information taken from
tobacco companies' legal filings, have claimed that tobacco companies
themselves have encouraged smuggling and deliberately target poor
countries to develop new markets.

``The large multinational tobacco companies are largely responsible for
the spread of the smoking habit to developing countries,'' according to an
Action on Smoking and Health statement.

Yesterday, the WHO said tobacco companies have subverted its tobacco
control activities by placing its own experts on panels and attempting to
discredit the agency by seeking to convince developing countries that the
WHO's anti-smoking campaign was against their economic interests.

``The companies fostered the view that tobacco control was a `First World'
concern'' and that curbs on tobacco crops in Third World countries might
exact a higher toll through poverty than tobacco use itself, the WHO
report said.