15 Nov 2012
There is a strong consensus among economists and intergovernmental institutions on how to do this, but Parties are not taking note of this. We encourage Parties to study the guidance of the World Bank and the World Health Organization, which is informed by best practices and a significant volume of scientific research.
The draft text that is developing at the COP is significantly weaker than this consensus and evidence, and will not genuinely assist Parties in designing and implementing tax policies which will reduce tobacco consumption.
Each country has a unique tax policy and circumstances, and these draft guidelines provide Parties with a unique opportunity to learn from successes in other countries.
Parties should not seek to use the guidelines to protect entrenched and tobacco industry driven tax policies but rather to set new and effective standards that raise the bar for everyone.
Tax policy, however, is complex and we need to ensure that taxes and prices increase over time in order to reduce consumption. We need to see that simple and appropriate tax structures are in place to ensure that increases in tax rates actually result in increased prices and reduced affordability.
Parties need to be certain that the tax system is administered in such a manner as to ensure that taxes are collected efficiently. In order to achieve this, cooperation between health and fiscal authorities in developing tobacco tax policies is essential. The reality, across the world including the EU , is that health officials find closed doors when they want to engage their finance counterparts.
At COP 4, the EU originally opposed the formation of the Working Group on Article 6, only to agree to its creation the following day, surprising many by offering to serve as a Key Facilitator.
This was a positive development. However, this Working Group was not funded through Committee B, and took place through the generous extra budgetary support of Australia.
Acting as Chair of the Working Group, the EU has had an overwhelming impact on the development of the draft text, driven by the interests of ministries of finance of the member states, which are not concerned with the health goals and obligations of the FCTC.
The EU has shown a lack of respect for other members of the Working Group by not taking seriously the important contributions of the other Parties and by focusing exclusively on compromises that relate to the EU member states as opposed to the rest of the world.
The EU should understand that compromise with 176 Parties is more important than compromise within 27 Parties.
Within the European Commission, the close cooperation between the Directorate-General for Health and Consumers and Taxation and Customs Union has led to an EU -wide tax policy that recognized Article 6 and its aim to reduce tobacco consumption. It is therefore difficult to understand why the EU is acting in such an obstructive and insular manner.
It is absolutely unacceptable for Parties to attempt to link tax increases and tax rates to illicit trade. We are encouraged that most Parties accept this principle; however, a very small number of Parties are insisting on repeating this debunked tobacco industry argument.
The evidence is clear: the countries with the highest rates of illicit trade have amongst the lowest
rates of tax in the world; additionally, many countries have experienced declines in the rate of illicit trade while simultaneously increasing tax rates by implementing many of the measures recommended by the ITP. An insistence by Parties to repeat this industry myth is likely to threaten the adoption of the Article 6 Guidelines at this COP.