[Intl-tobacco] Thailand: Lower Tariffs to Increase Smoking Deaths

[Robert Weissman]

*Bangkok Post
May 2, 2005
*

*TOBACCO TRADE LIBERALISATION UNDER AFTA *

*Cost of smoking-related deaths seen as downside of lower tariffs *

*/ /*

*WORANUJ MANEERUNGSEE *

Tariff cuts under the Asean Free Trade Area have helped boost
intraregional trade and investment ties, with consumers the ultimate
beneficiaries in the form of lower prices and better quality products
and services.

But an economist at Chulalongkorn University says trade liberalisation
should not necessarily be applied to all products.

According to Isra Sarntisart, trade liberalisation under Afta could
cause an additional 1,339 deaths in Thailand over the next two decades
from tobacco-related causes as tobacco and cigarette tariffs have fallen
under the trade liberalisation agreement.

Mr Isra makes his case in a study titled ``Afta and Tobacco in
Thailand'' that was prepared for the Rockefeller Foundation and the Thai
Health Promotion Foundation.

The estimates of higher smoking deaths are based on projections of the
increase in smoking among the population due to lower prices. Rural
smokers, in particular, are considered to be more sensitive to price and
more likely to increase smoking as a result of price declines.

Mr Isra calculates that demand for imported and domestic cigarettes will
increase by around 90 million due to tariff declines, raising the amount
of cigarettes smoked per adult by 6.4 per year. Based on previous
mortality studies, the additional cigarettes smoked will increase lung
cancer mortality by 1.5878 per 100,000 adults in 2023, with the total
number of tobacco-related deaths standing at 1,339 in 2023.

The cost in terms of foregone earnings from each death is estimated at
611,824 baht in 2003 and 819 million baht in total in 2023, excluding
health-care costs of tobacco related diseases, which some studies have
estimated at as much as 2% of total annual health-care spending.

Tax revenues are also affected. Due to lower import tariffs on
cigarettes, the government lost about 1.2 billion baht in pre-Afta
revenues in 2003. Of this amount, around 860 million baht is estimated
to be foregone excise tax revenues and 320 million in tariff revenues.

Under Afta's Common Effective Preferential Tariff (CEPT) scheme, Asean
members have enjoyed freer tobacco trade with Thailand since 1998.
Beginning in 2003, import tariffs on tobacco and tobacco products were
cut to 5%, while products from non-Asean countries are taxed at 22.5%
for cigarettes and 45% to 60% for tobacco and related products.

Mr Isra said other Asean countries had been similarly affected as
Thailand from tariff reductions on imported cigarettes.

``Most Asean countries share the same fate as Thailand. But not
Indonesia as Indonesian smokers regard local cigarettes as a premium
product. As for Brunei, it has designated these products as sensitive
items,'' he said at a forum last week.

In his report, he suggested that the government increase the excise tax
by one percentage point to 76% in order to compensate for the losses in
tax revenues.

Dr Prakit Vathesathokit, a leading campaigner against smoking, proposed
at the forum that cigarettes should be removed from the Afta programme
and other bilateral free trade arrangements between Thailand and other
countries.

``Cigarette importers have received a windfall from our low import
tariff plan. But, we cannot share some of that money to promote good
health for Thais,'' said Dr Prakit, a former chairman of chairman of the
Thai Health Promotion Foundation.

But officials from the Trade Negotiations Department says that removing
cigarettes from Afta by rolling back trade commitments under existing
treaties was unlikely, if not impossible.

``At this moment, I think it is hard for Thailand to [reverse its
position] as Thailand is playing a leading role in Asean. Prime minister
[Thaksin Shinawatra] is unlikely to do anything that would setback Asean
integration,'' one official said.

But Dr Prakit said from an economic and social perspective, liberalising
``sin products'' made little sense.

``From a doctor's point of view, it's worth it if it helps improve the
health of the Thai people. There are around 9.2 million smokers in this
country, of whom 6.2 million are poor and uneducated. It is they who pay
these excise taxes. We shouldn't be happy to earn money from the poor,''
he said.