‘Tobacco Tax: A sustainable source for Health Financing’

BISHNU NEPAL, KATHMANDU, July 17: One of the effective ways of reducing tobacco consumption is to spike up tobacco tax.

A joint study by the World Bank and the World Health Organization recently conducted in various countries including South Africa, the Philippines, Thailand, New Zealand America and Britain shows that even a 10 per cent increment in the tax on tobacco products led to a significant drop in the consumption of tobacco products by the lower class and the middle class people in these countries.

The report states that there has been a considerable improvement in the health sector after the less access of the new generation or the youth to tobacco products.
“It was seen that the consumption of tobacco products fell between four to eight percent when tax on tobacco products was increased merely 10 per cent,” said Jeffrey Drope, Vice President, Economic & Health Policy Research, American Cancer Society, USA.

Drope, who was also involved in the study, said increasing the tobacco tax also led to a rise in the overall budget in the health sector. According to him, of late tobacco consumption has emerged as one of the major causes of the non-communicable diseases like cancer, blood pressure, tuberculosis, pneumonia, brain hemmorage and heart diseases. It has also become a major public health issue.

A study conducted by The Union, Singapore in collaboration with the WHO showed that tobacco consumption is the main cause of the death of 42 to 68 persons daily in Nepal. The Union has been working for the prevention and control of tobacco worldwide.

Dr. Tara Singhj Bam, Deputy Regional Director of The Union, shared that tobacco consumption is emerging as the silent killer in the lower and middle class. “There is discussion about opening new cancer hospitals but why is there no debate on prevention and control. Why do not the government and planners pay attention to this,” he said.

The Ministry of Finance had started levying one paisa additional tax on a stick of cigarette for the first time in 1993. The tax was increased to 2 paisa the following year. But it has not been increased ever since that year.

Annually more than Rs 12 billion is deposited in the Health Service Tax Fund by way of additional surcharge. Out of the amount collected in the Fund, the Finance Ministry earmarked only Rs 400 million to the Ministry of Health last year. Rs 40 million of the allocated amount was frozen as it could not be spent.
“The amount that is given to the non-governmental organisations for raising public awareness was frozen for lack of work procedure. The task of formulating a work procedure has reached the final stage. The amount would not go into the freeze next year,” newly-appointed Health Secretary Dr. Kiran Regmi said.

The Ministry provides 75 per cent of the amount collected in tax as subsidy to its hospitals for the treatment of cancer and the remaining amount for the treatment of other diseases including heart diseases.

“The tax levied on cigarette stick should be increased. The Ministry will do home work regarding this. Doing so would have positive impact on the health of the lower and middle class families, which has been proven from studies,” she said.
On the other hand, there is a mandatory provision that the companies producing tobacco related products should not sell their products in domestic and foreign markets without printing 90 per cent health warning pictures on the wrapping of the products.

Surya Nepal Company has not still followed such provision of the Tobacco Products (Control and Regulation) Act implemented by the Health Ministry. Tax Officer of Inland Revenue Office, Ishwor Koirala, said that there are only three cigarette-producing factories in the country.

He said, “We are going to strictly implement the provision of printing the health warning signs on the wrapping of the products as like the provision of pasting sticker on tobacco related products.”

Similarly, Chairperson of Action Nepal, Ananda Bahadur Chanda, pointed out the need of increasing tax sphere on tobacco-related products to 70 per cent. The organisation has been advocating about the negative impacts of tobacco related products on people’s health in Nepal since long.

The World Health Organisation has suggested its member countries to increase tax of tobacco related products to 70 per cent, but tax of such products is now up to 28 per cent in Nepal. The government has set 28 per cent VAT in liquor and tobacco related products in the current fiscal year 2017/18.

Tobacco Products (Control and Regulation) Act has not been effectively implemented in lack of coordination between the Home Ministry and Health Ministry. The Regulation prohibits the use and sell of tobacco products in public places.

Chief Specialist of the Health Ministry, Dr Pushpa Chaudhary, said that it was necessary to increase more public awareness about the impacts from the use of tobacco products.
Similarly, lawmaker Ramhari Khatiwada said, “The government and political parties should take the matter of untimely death of 42-68 people every day from the use of tobacco products sensitively. Solution in this regard should be found out.” RSS