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Dr dorotheo on sea tax practices
 

Dr dorotheo on sea tax practices

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SITT Project Director Dr Ulysses Dorotheo's presentation on International Best Practices on Tobacco Tax

SITT Project Director Dr Ulysses Dorotheo's presentation on International Best Practices on Tobacco Tax

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    Dr dorotheo on sea tax practices Dr dorotheo on sea tax practices Document Transcript

    • 8/2/10   Southeast Asia Tobacco Control Alliance Tobacco Taxes and Health Promotion Funding Mechanisms: International Best Practices Ulysses Dorotheo, MD, FPAO Project Director, Southeast Asia Initiative on Tobacco Tax Seminar on Health Promotion Funding and Tobacco Tax 22 June 2010 * UP College of Law In a nutshell Raise taxes and prices of tobacco •  Increase government revenue •  Save lives •  Improve quality of life 1  
    • 8/2/10   •  a. How does Philippines compare with other countries in terms of taxes? In terms of earmarking? •  b. What is HPF? And other forms of funding mechanism for HPF? •  c. In other countries, how has HPF contributed to the economy? To tobacco control and public health in general? To other advocacies: health financing/ insurance, environment, social welfare, sports, education, alternative farming, etcd. •  Describe the benefits of investing in “Social Mobilization.” (Give examples of success stories). •  What are the characteristics of a good HPF model? Southeast Asia Tobacco Control Alliance Poverty is not just about living on less than $1 a day Lack of opportunities Lack of capabilities Lack of security Lack of empowerment * Lack of a health-supporting living environment 2  
    • 8/2/10   Poverty, Health, and MDGs •  The MDGs derive from the UN Millennium Declaration 2000. They call on Member States to work together to eliminate extreme poverty and hunger, to improve health, and promote human development and sustainable economic progress in the world’s poorest nations. •  The World Health Organization Commission on Macroeconomics and Health in 2001 highlighted the link between poor health and lack of economic progress. It identified tobacco as a major avoidable cause of illness and premature death in low income countries and urged that tobacco control be enacted to improve the prospects of the world’s poorest billion people. •  The WHO Framework on Tobacco Control (WHO FCTC) includes comprehensive measures to reduce demand, minimize harm, and control cross-border tobacco promotion and illicit trade. 3  
    • 8/2/10   Mortality rates among men and women aged 15–59 years, region and cause-of-death group, 2004 Health Statistics and Informatics WESTERN PACIFIC Deaths in 2000 attributable to selected leading risk factors Number of deaths (000s) 4  
    • 8/2/10   A third (or 430 million) of the world’s smokers are found in the WP Region. 2 people die each minute from a tobacco-related disease in the WP Region. *10 Filipinos every hour 5  
    • 8/2/10   17% Filipino youth 13-15 years currently smoke cigarettes Source: Philippine GYTS 2007 •  Hunger and malnutrition are made worse where scare resources are used for tobacco. •  Smoking rates among the uneducated or less educated outstrip rates among the more educated. •  Exposure to advertising, promotion and sponsorship is higher in dense urban areas that have media access. Relevant FCTC provisions • Price and tax measures • Ban on sale to and by minors • Packaging and labeling • Tobacco advertising, sponsorship and promotion • Demand reduction in relation to tobacco dependence • Protection of the environment and health of persons working in tobacco production 6  
    • 8/2/10   •  The tobacco industry employs children in cultivation and production in the developing world. •  Very poor families spend money on tobacco rather than education for their children. Relevant FCTC provisions • Price and tax measures • Packaging and labeling • Tobacco advertising, promotion and Sponsorship • Ban on sale to and by minors • Demand reduction in relation to tobacco dependence • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry •  Advertising encourages women in developing countries to smoke as a sign of independence and success. Relevant FCTC provisions • Price and tax measures • Packaging and labeling • Tobacco advertising, promotion and Sponsorship • Ban on sale to and by minors • Demand reduction in relation to tobacco dependence • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry 7  
    • 8/2/10   •  Women who use tobacco have smaller babies, who are weaker and more likely to die. Passive smoke disproportionately affects women and children and increases respiratory and other diseases in children. Relevant FCTC provisions • Price and tax measures • Packaging and labeling • Tobacco advertising, promotion and Sponsorship • Ban on sale to and by minors • Demand reduction in relation to tobacco dependence • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry •  Poor maternal nutrition and health are major causes of infant mortality. Money spent on tobacco deprives mothers and babies of food and possibly medical attention. Relevant FCTC provisions • Price and tax measures • Packaging and labeling • Tobacco advertising, promotion and Sponsorship • Ban on sale to and by minors • Demand reduction in relation to tobacco dependence • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry 8  
    • 8/2/10   •  Smoking causes further illness in those with HIV/AIDS, including bacterial pneumonia and AIDS-related dementia. Smoking causes sub clinical tuberculosis to advance to clinical tuberculosis and increased risk of death. Relevant FCTC provisions • Price and tax measures • Packaging and labeling • Tobacco advertising, promotion and Sponsorship • Ban on sale to and by minors • Demand reduction in relation to tobacco dependence • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry •  Globally, land is cleared for tobacco farming and wood-fired curing at the rate of 200,000 hectares per year. This accounts for 5% of deforestation in developing countries, especially among major tobacco producers such as China, Malawi and Zimbabwe. Relevant FCTC provisions • Price and tax measures • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry 9  
    • 8/2/10   •  MDG implementation should incorporate tobacco control because by this means healthy development and macroeconomic gains can be made. Modelling shows that millions of people will avoid or quit using tobacco and millions of lives will be saved if tobacco control measures are adopted. Relevant FCTC provisions • Price and tax measures • Packaging and labeling • Tobacco advertising, promotion and Sponsorship • Demand reduction in relation to tobacco dependence • Support for economically viable alternatives • Protection of the environment and health of persons working in the tobacco industry Tobacco tax in ASEAN Country Excise tax %* Total tax %** Cambodia 10 20 / 25 Indonesia 45 ave 55 ave Lao PDR 15 (55) 10 Malaysia 45-65 Philippines 14-42 24-53 Singapore 69 Thailand 80 70 Vietnam 65 45 *% of ex-factory price or production cost *% of retail price 10  
    • 8/2/10   Tobacco Tax Policy Singapore Smoking Prevalence (18-69 years) 11  
    • 8/2/10   Reduce Reduce Public Supply Demand Education Legislation Partnerships Taxation Smoking Cessation Services 12  
    • 8/2/10   13  
    • 8/2/10   Impact of Tobacco Tax on Consumption Singapore’s Tax System All tobacco products are subject to "   excise tax "   goods and services tax (GST) 7% (on the cost, insurance and freight incurred + tobacco tax) Tax goes into Government’s consolidated funds. 14  
    • 8/2/10   Year Excise Duty of Cigarettes Retail Price 20 sticks S$ S$ 1972 N/A N/A 1983 14 per kg NA 1987 34 per kg 2.80 1990 42 per kg 3.30 1991 50 per kg 3.70 1993 60 per kg 4.90 1995 - 98 115 per kg 5.50 1998 - 99 130 per kg 5.80 2000 150 per kg 6.40 2001 180 per kg 6.90 2002 210 per kg 6.50 Mar 2003 255 per kg 7.70 July 2003 0.255 per stick of <1g 8.50 2004 0.293 per stick of < 1g 9.50 2005 - 2008 0.352 per stick of <1g 11.00 Up to Mar 2003 (by weight) "  Excise duty on cigarettes was by weight per kg of tobacco From July 2003 (by stick) "  Excise duty on cigarettes was revised: "   Each stick of cigarette not exceeding 1g was levied a duty of 25.5 cents; "   Each additional 1g or part thereof was levied a duty of 25.5 cents. 15  
    • 8/2/10   "   Emergence of low price cigarettes (LPCs) in 2000 "   LPCs had lower amount of tobacco content and thus lower weight per cigarette "   Shift in consumer behaviour pattern. Sale of LPCs increased from 6% in 2000 to 25% in 2003 "   The average retail price for a 20-stick pack of LPCs was $5.50, while the price for conventional cigarettes was $6.50 "   LPCs attracted the young who were contemplating picking up smoking Real Retail Price vs Per Capita Cigarette Consumption 10 2.20 2.00 9 1.80 8 Per Capita Consumption Real Retail Price ($) 1.60 7 1.40 6 1.20 5 1.00 4 3 0.80 0.60 2 0.40 1 0 0.20 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year Real Price Per Capita Consumption 16  
    • 8/2/10   From 1985 - 2005 "  300% increase in cigarette price index (or 3 fold increase) averaging 4% increase in price per year "  57% decrease in per capita cigarette consumption (2.15kg in 1985 - 0.73kg in 2005) "  10% increase in cigarette price index resulted in 6% decrease in consumption "   Singapore’s tax at 69% has contributed to a big price differential when compared to neighbouring countries. "   Smuggling has increased significantly over the last 2 years. "   Will further tax increase lead to increase smuggling? 17  
    • 8/2/10   Tobacco industry’s own words “Of all the concerns, there is one-taxation- that alarms us the most. While marketing restrictions and public and passive smoking (restrictions) do depress volume, in our experience taxation depresses it much more severely.” [1985 Philip Morris document] 36 18  
    • 8/2/10   Low tax policy option •  Income increased from increased tax collection from increase sale and industry profit •  Increased sale means increased number of smokers •  Increased number of addiction in the young •  Increased health care expenditure from increased smoking 37 Higher tax policy option •  Markedly increased income from tax increase •  Same or decreased amount of cigarette sales •  Same or gradual decrease in number of smokers •  Decreased number of addiction in the young •  Decreased health care expenditure from decrease smoking 38 19  
    • 8/2/10   Tobacco Tax: Win-Win policy Win = government receive much more income from tobacco tax Win = prevent increase number of smoker, less number of children being addicted Evidence to support tax policy Projected effect of tax increase on cigarette sales, revenue and child smoking 20  
    • 8/2/10   Evidence to support tax policy Calculate the real price of cigarette Cigarette price VS daily wage 1982 1985 1992 Minimum wage 46 54 128 (Baht/day) Retail price 12 13 15 (Baht/pack) Adjusted retail price 12 14 33 (Baht/pack) Cabinet resolution in 1993: 21  
    • 8/2/10   Excise tax, cigarette sales and tax revenue What happened between 1994 - 2007   8 incidents of tax increase   Average interval between each increase = 1.6 year   Cigarette retail price rose from 15 to 45 Baht. 22  
    • 8/2/10   Comparison of Cigarette Sale and Revenue Financial gain form tax policy 1993 – 2006)   Average increase tax revenue per year = 14,019 M.Baht = 400 M.USD   Total increase tax revenue (1994-2006) = 182,247 M.Baht = 5,207 M.USD 23  
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    • 8/2/10   Health Promotion Funding Act 2001 - Setting up of Health Promotion Office - Funding health promotion related activities with 2% of additional alcohol and cigarette taxes. -  Annual budget = 50 million US$ ( = 2.5% of MOPH budget) - An autonomous state agency. (Annual budget = 75 million US$ in 2007 ) 29  
    • 8/2/10   Major programs funded by Thai Health 7. Healthy Workplace 8. Healthy Communities 9. Open Grant (Reactive Grant) 10. Social Marketing 11. Support Programs 30  
    • 8/2/10   31  
    • 8/2/10   Excise tax, cigarette sales and tax revenue *ASEAN imports 32  
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    • 8/2/10   Using Tobacco Tax for Tobacco Control in Thailand Dedicated Tobacco Tax For Tobacco Control and Health Promotion WIN-WIN POLICY 35  
    • 8/2/10   Why Win-Win Policy   People with healthy lifestyle are more productive to country   Health care cost will be decreased in long term   Money comes from Tobacco industry NOT government budget - Polluters pay How is tobacco tax used for tobacco control?   Earmarked / dedicated   Surcharged Why: A dedicated levy from tobacco tax, does not come from the general health budget, and does not have to compete with other items 36  
    • 8/2/10   ADVANTAGES   Independent but accountable   Provides a a sustainable base & structure for health promotion   Longer-term investment in health promotion Thailand:  situa-on  analysis   Total  popula-on              =  65  million     Number  of  smokers        =  10  million     Deaths from tobacco = 52,000 /year   Lung cancer deaths = 10,000 /year   Estimated economic loss = 414-1200 M $ 74 37  
    • 8/2/10   Thailand:  situa-on  analysis   Per  capita  alcohol  consump-on  rank  7th   of  the  world     Less  than  1/3  of  Thais  exercise  regularly     Traffic  accidents  claim  30  lives  per  day  /   13,000  deaths  per  year   -­‐  Traffic  accidents  cost  USD  1.7  M  =   2.25-­‐3.48%  of    GDP   75 10% reduced: $500 M saved   If health promotion efforts succeed in reducing expenditure in these three areas (tobacco, alcohol, traffic accident) by 10 percent, the country would save 488 million US$ per year. 76 38  
    • 8/2/10   Proposal to set up ThaiHealth Secure funding for health promotion including tobacco by requiring the tobacco and alcohol companies to pay an additional 2% tax into a special account for health promotion 1.  Health promotion and tobacco control needs regular and sustainable budget 2.  Less susceptible to diversion of funding for other purposes. 39  
    • 8/2/10   How much is 2%?   Total Annual health expenditure $6097 million   MOPH budget = $1707 million   Tobacco & alcohol Tax = $2195 million   2 % of tobacco and alcohol tax = $44 million = 2.57% of MOPH budget = 0.72% of Total health expenditure = 0.15% of Total budget 79 A lot of homework and effort   Research and evidence   Economic argument   Best practice from other countries   Work closely with Ministry of Finance   Mobilizing support   Media   Public Health and Health promotion community   Policy makers 40  
    • 8/2/10   Long and winding road but finally.. 1995-1998 Homework between MOH, Tobacco Control Advocates and MOF 1998 The Cabinet approved Thai Health Promotion Bill 1999-2001 Draft Bill was discussed in the Parliament 2001 Parliament enacted the Bill 2001: Thai Health Fund established 41  
    • 8/2/10   ThaiHealth’s income (2009)   Total 78 Million USD   Tobacco tax 26 M USD Tobacco   Alcohol 52 M USD tax 33% Alcohol tax 67% 42  
    • 8/2/10   How much ThaiHealth fund tobacco control Professional Policy Networks Development 18% and Enforcement 11% Social Research and mobilizatuion, Information Mass Media 39% Campaigns and Quit line 32% Tobacco Control Budget in 2009: 6.3 Million USD 43  
    • 8/2/10   Key Organizations working on tobacco control   Action on Smoking and Health Foundation (1986)   National Committee on Tobacco Control (Policy development) (1989)   Tobacco Control Unit at MOH (1989)   Thai Health Promotion Institute (NGOs) (1996)   Southeast Asia Tobacco Control Alliance (2001)   Health Professionals against Tobacco (2005)   Tobacco Control Research Center (2005)   National Quitline (2009)   Many community based programs In a nutshell Raise taxes and prices of tobacco   Increase government revenue   Save lives   Improve quality of life 44  
    • 8/2/10   For more information   www.thaihealth.or.th   www.seatca.org 45