A top contender for prime minister, who is a traditionally pro-tobacco lawmaker, has derided government measures to hike excise taxes on the nation’s cheap and plentiful supplies of alcohol and tobacco products.
Mykola Azarov, one of President Victor Yanukovych’s three candidates for prime minister, hinted at decreasing such taxes, a step that runs counter to proven global anti-smoking and revenue-generating practices.
Azarov, a Party of Regions leader, criticized measures that quadrupled tobacco and alcohol excise taxes in less than a year from August 2008 to May 2009. Those hikes brought in an additional Hr 9 billion in government revenue in 2009, more than $1 billion in a $30 billion national budget, according to the Ukrainian Institute of Strategic Research under the Health Ministry.
Azarov, 63, who has consistently voted against anti-tobacco measures in parliament, called the tax hikes a “stupid economic idea,” according to an interview with Fakty newspaper on Feb. 18.
“Whoever drink vodka, continues drinking it. The same can be said of tobacco: people who smoke continue to smoke,” Azarov said. “But they pay Hr 2-3 more per pack now. And this means the additional Hr 2-3 could’ve been spent on groceries, clothing, transportation expenses.” He could not be reached for comment for this story.
The Russian native’s statements contradict official statistics, surveys and global consumer trends showing that smokers are very price-sensitive. Consequently, higher tobacco prices prompt smokers to quit, others to reduce consumption and prevent still more people from ever starting to smoke. Ukraine’s cheapest cigarettes and low taxes are contributing factors to one of the highest smoking rates in the world. The highly addictive habit prematurely kills more than 100,000 Ukrainians each year.
Last year, due to the recent tax hikes, 15 billion fewer cigarettes were produced in Ukraine than in 2008, according to Konstiantyn Krasovsky, head of the Health Ministry’s tobacco control unit. That’s about a 12 percent drop.
“People are smoking less since the tax hikes, we’re seeing fewer alcohol-related deaths,” Krasovsky said. “Azarov’s claims don’t correspond with reality.”
Despite the recent tax hikes, prices for cigarettes and alcohol in Ukraine remain among the lowest in Europe. On average, only 39 percent of the share of retail cigarette prices consists of taxes. The European Union norm since 2002 is no less than 57 percent.
For example, a Marlboro pack costs Hr 9 in Ukraine, Hr 12 in Russia and they are twice as expensive in Romania and Bulgaria, countries with similar wealth to Ukraine, according to Hanna Hopko, a tobacco-control activist with For A Tobacco-Free Ukraine, a coalition of civil society organizations.
“And taxes need to be increased regularly to correct for inflation and consumer purchasing power,” said Maryanna Zaichykova of the World Health Organization.
Last year, three tobacco companies were among the country’s top five tax payers along with steel and chemical giants, according to state tax administration data.
The Kyiv International Institute of Sociology reported in December that the number of daily smokers in Ukraine dropped by two percentage points from when the excise taxes began to increase in 2008.
Global studies have shown that, for every 10 percent increase in the price of cigarettes, youth smoking shrinks by 7 percent and overall consumption drops by about 4 percent, according to Hopko.
In fact, increasing the price of alcohol and cigarettes benefits society in a number of ways. “An increase in tobacco tax rates is not only sound public health policy but a smart and predictable way to help boost the economy and generate long-term health savings for states facing deepening budget deficits,” said John Seffrin, chief executive of the American Cancer Society Cancer Action Network, in reference to the U.S. government’s recent attempt to increase cigarette prices by $1.
“We have irrefutable evidence that raising the tobacco tax lowers smoking rates among adults and deters millions of children from picking up their first cigarette,” Seffrin said in a statement.
As a result of healthier, more smoke-free people, health care systems aren’t strained and workers are more productive. Studies also show that most smokers want to quit and higher prices give them the incentive to do so.
According to a recent World Bank report, half of the deaths of Ukrainians before age 75 could be avoided by reducing major risk factors: tobacco smoking, alcohol consumption and better traffic safety.
“As cigarettes are commonly available to the population, smoking is a topical problem, especially considering the tuberculosis epidemics in Ukraine, because cigarette smoke has an adverse impact on immunity,” said Nonna Shmidik, public relations manager of the Rinat Akhmetov Foundation for the Development of Ukraine, which implements an anti-tuberculosis program in the country.
“In the near future, the foundation is planning to launch a campaign aimed at people working in places with high tuberculosis morbidity. In the course of this campaign, they can exchange two packs of cigarettes for one respirator,” she said.
The World Health Organizations states that tobacco use kills 5.4 million people a year and that the epidemic is worsening.
Nationally, Ukraine still has no 100 percent indoor smoking ban. Also, cigarettes are barely regulated and available at every street kiosk, even to minors. A law which will have pictorial warnings covering 50 percent of cigarette packs will go into effect only in mid-2011, but is currently in danger of being repealed by pro-tobacco lawmakers in parliament, such as Taras Chornovil and Azarov.
Despite a ban on print advertising, tobacco companies are still allowed to advertise in “special editions.”
Multinational tobacco companies came to Ukraine in 1993, promising employment, investment and revenue. Now they control 99 percent of the tobacco production in Ukraine. In 1992, Ukraine produced 9,000 tons of tobacco leaves. However, despite huge increases in cigarette production, tobacco growing has almost disappeared in the country.
Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].
