* This is my article in BusinessWorld last Wednesday, August 01, 2018.
Health alarmism is the practice of frequently looking at
health conditions pessimistically and then calling for more government
regulations, taxation, and prohibitions supposedly to ameliorate the perceived
pessimism.
Smoking is something that many people indulge in despite
awareness of its dangers. The reason is that people own their body, not the
government or doctors or NGOs. That is why many people also engage in dangerous
activities like rock climbing, sky jumping, downhill bicycle racing, deep sea
diving, full contact sports like boxing and UFC, and so on.
So aside from high and ever-rising tobacco taxes,
advertising ban, smoking ban in public places, graphic warning in packs, the
most extreme perhaps is mandatory plain packaging — no more branding and logos,
only graphic warnings, pictures of damaged lungs, throat, tongue, etc. Their
purpose is to further discourage people from smoking on top of existing
measures mentioned.
One thing noticeable in the health alarmism of “more
deaths due to non-communicable diseases (NCDs) due to smoking” is its
inconsistency with data on rising life expectancy. From developing to developed
coun- tries, people are living longer and healthier.
In addition, smoking prevalence among adults has been
declining in many countries all these years even without plain packaging and
related extremist measures.
When people have rising incomes, they also increase their
appetite for travel, to live longer and naturally reduce substance abuse.
Rising tobacco taxes and similar restrictions of course have also contributed
to such reductions.
Based on the numbers, there seems to be little
correlation between smoking prevalence and life expectancy. Japan has high
smoking prevalence of 34% or twice of Australia’s 17% and yet Japan has higher
life expectancy of 84 years compared to Australia’s 82.5 years. South Korea has
smoking prevalence of 50% or three times that of Australia and yet they have
similar life expectancy.
Australia is the first country in the world to legislate
plain packaging in December 2012. Several tobacco-exporting countries like
Indonesia and Honduras went to the World Trade Organization (WTO) to complain
the measure as non-tariff barrier to trade. In late June 2018, WTO made a
ruling that Australia’s law is valid.
If we bring in the above numbers to this case, it is
clear that the plain packaging law is not really a health measure but a
political measure to shut out some legitimate businesses while unintentionally
aiding illegitimate businesses including criminal and terrorist groups whose
main fund-raising activity is smuggling and illicit trade.
The decline in smoking prevalence/incidence in many
countries all these years can be explained by (a) people’s awareness of the
dangers of smoking, (b) effects of high cigarette taxes, smoking bans in public
places, etc.
Another possible explanation is (c) people are smoking
fewer products from legitimate manufacturers but actually smoking more products
from smugglers and illegal sources as the latter’s prices are much cheaper.
In the case of Australia, a KPMG study last year showed
that after the plain packaging law in 2012, the estimated share of illicit and
smuggled tobacco rose from 11.5% of total tobacco consumption in 2012 to 13.5%
in 2013 and since then stayed at around 14.2% average from 2014-2016 (source:
KPMG, “Illicit Tobacco in Australia, 2016 Full Year Report,” March 2017.)
The Philippines has no plain packaging law or legislative
proposal yet but only rising tobacco taxes: P30/pack under the Sin Tax law of
2012 (RA 10351), became P35/pack this year and P40/pack in 2020 under the TRAIN
law of 2017 (RA 10963), then another push towards P90/pack as proposed by Sen.
JV Ejercito and many health NGOs.
The impact on cigarette smuggling seems to be big. See
for instance a BusinessWorld report on May 01, 2018, “DoF warns cigarette
smuggling may be helping finance terrorism.” The report quoted DoF Secretary
Sonny Dominguez as saying that “Illegal money can end up funding terrorist
activities” while Customs Commissioner Caesar Dulay said that “smuggled
cigarettes are currently flooding the market.”
The twin measures of more tobacco taxes and plain
packaging policy are perfect formula to encourage more tobacco smuggling, more
fake products that are cheap and can encourage more smoking and more smokers.
And more money to criminal and terrorist groups that are engaged in illicit
trade.
Newton’s third law of motion (“for every action there is
an equal opposite reaction”) can also apply in economics and trade policy: For
every taxation and prohibition, there is an equal and opposite distortion.
Bienvenido S. Oplas, Jr. is President of Minimal
Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.
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See also:
BWorld 218, Tobacco taxation, smuggling and plain packaging, June 07, 2018
BWorld 236, Two years of Duterte energy policies, August 02, 2018
BWorld 237, The sharing economy index, August 03, 2018
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