[Intl-tobacco] Study Says Higher Tobacco Taxes Key To Curbing Smoking (fwd)

[Robert Weissman]

Study Says Higher Tobacco Taxes Key To Curbing Smoking
by John Connor / Dow Jones Newswires; 202-862-9273; john.connor@dowjones.com
Source: The Wall Street Journal Interactive Edition, Tuesday, 8/8/00

WASHINGTON -- The key to cutting cigarette smoking, particularly among the
poor, the young, and the relatively uneducated, is to raise taxes on
tobacco, according to a new study.

Published Tuesday by the World Bank and World Health Organization, the
study said a tobacco tax increase has been found to be a very effective
tool for lowering tobacco use, especially in developing countries.

Researchers for the two organizations estimated that higher taxes leading
to a 10% rise in cigarette prices would motivate about 42 million persons
to quit smoking and could prevent 10 million tobacco-related deaths, nine
million in low- and middle-income countries.

What's more, the study said, government revenues would actually rise by 7%
on average for a 10% increase in cigarette taxes.

"This research shows that the economic measure of a tax increase is the
single most important intervention by governments to curb tobacco
consumption," said Dr. Gro Harlem Brundtland, WHO director-general.
"Governments wishing to halt the rising toll of tobacco-related deaths
should strongly consider a tobacco tax hike as a matter of priority."

The 512-page study is being published as a book -"Tobacco Control in
Developing Countries." It is the result of a three-year research project
involving a team of about 40 economists, social scientists, legal and
public policy experts, and epidemiologists from 13 nations.

"Tobacco control is a high priority in our efforts to improve global
health,"  said World Bank President James Wolfensohn.

The study said efforts to reduce the supply of cigarettes have been
largely ineffective. It said prohibition and trade embargoes are
unrealistic, and that attempts to restrict cigarette sales to teenage
smokers have usually been unsuccessful, even in countries with substantial
enforcement capacity. Crop substitution schemes also have failed, largely
because of stronger financial incentives to grow tobacco, it said.

Saying almost a third of all cigarette exports are smuggled, the study
said individual governments that have tried to reduce smuggling by
slashing taxes often have suffered an increase in consumption and a fall
in revenues.

"A more effective response would be to keep taxes high and crack down on
smuggling," said Frank Chaloupka, a professor at the University of
Illinois and a joint editor of the publication. "Prominent tax stamps,
serial numbers, special package markings, health warning labels in local
languages and better tracking systems are effective against smuggling."

The study said any impact on employment from a slump in tobacco sales
would be minimal and gradual. "If tobacco consumption fell, most countries
would experience no net job losses and some would even experience net
gains, as money once spent on tobacco was diverted to other goods and
services, creating new jobs," said Dr. Prabhat Jha, senior scientist at
WHO and another joint editor of the publication.

"However," he said, "if global demand fell, a few tobacco exporting
countries - especially in sub-Saharan Africa - would experience job losses
in the longer term and would need some assistance during the adjustment
period."


URL for this Article:  
http://interactive.wsj.com/archive/retrieve.cgi?id=BT-CO-20000808-000010.djml