Recent tax increase on cigarettes in Australia and some thoughts on the downstream effects:

On April 29, 2010, The Sydney Morning Herald reports 25% tax increase on cigarettes. Smokers rushed to stock cigarettes for ‘future crisis’ period. Hot on the heels of last week’s post about Globalisation, cigarettes and international pop artists, this week Anupom Roy from the Department of Anthropology, Macquarie University, considers the hard facts of transnational tobacco sales.

In Australia—as with many developed countries—imposing a higher tax has been considered as an effective strategy to discourage people to smoke. This strategy has probably played one of the most important roles in the reduction of smoking in the West. Non-smokers more or less agree with it and are aware of the improved wellbeing in developed countries. But there is another less-appreciated picture of higher tax in developed countries that has effects on developing countries.

Who are the giants of global tobacco market? We have three giant transnational tobacco companies in Australia. They are British American Tobacco, Philip Morris and Imperial Tobacco. Every single minute, these three giants are selling 1100 packs, each containing 25 cigarettes. To stimulate our thoughts, let us consider the top five cigarette companies in the world. The ranking goes: Chinese National Tobacco Corporation, Philip Morris, British American Tobacco, Japan Tobacco, and Imperial Tobacco. Yes Australia has three in out of these five. Developed countries have been imposing taxes on these companies for a long time. Has it had a huge impact? Has it made some of them bankrupt or at least forced to shrink their business? After all, people in developed countries have started to consume fewer cigarettes because of the high price. Lower sales means less profit and reduction in stock market and so on. Doesn’t it?

Let us take the British American Tobacco (BAT) as a case study for further discussion. On their website BAT declares, “We are the world’s second largest quoted tobacco group by global market share, with brands sold in more than 180 markets.” The profit has been increasing every year which allows them to say, “We have sustained a significant global presence for over 100 years.” So despite all these high taxes, the companies have been earning more and more every year. How does that happen? And, at what peripheral cost? It comes at the cost of the lives and wellbeing of many. The majority of whom live somewhere in Africa and Asia.

Transnational tobacco companies have been very keen to extend their business in poor countries where tobacco control law is poor or simply does not exist. In developing countries, these companies can influence the governments to tailor the health policy in favour of the products on sale. Very often the states of developed countries assist in this process and help international tobacco companies to gain a market share in developing countries. Anthropological literature on this issue can be found in the writing of Stebbins (1991). Throughout the extensive colourful advertisements featuring aristocracy, ‘coolness’ etc. has become very lucrative and effective strategy to allure poor people to smoke. The poor people who have already been struggling in every moment of their lives with various infectious and non-infectious diseases, where hunger is everyday part of the lives, have been rushing to buy the ‘luxury’. We are aware of the fact that many families in the developing world often have only one family breadwinner. So when that person gets sick it impacts the whole family. Moreover, low smoking prevalence among women especially in Asian countries is being considered as another prospective market to the international tobacco companies.

To return to where we began, we may ask: Is high tax on cigarettes in developing countries influencing international tobacco companies to have a sole focus on poor countries to be able to sustain their profits and to be able to tackle their staggering market in developed countries? Do we want to reduce only OUR tobacco addiction? Don’t we want tobacco to be reduced worldwide? Developed countries have been using the issue of globalisation as a very strong excuse to intervene in the markets of developing countries and earn millions of dollars. If we want to stick with the idea of globalisation, we may also have to think about global wellbeing. Looking at the close cohesion and interaction among citizens worldwide, the presence of “the citizen of the nation” seems to be less important. Isn’t it time we begin to think about global wellbeing?

To follow: How can the states of developed countries assist poor countries to tackle tobacco consumption?

Sources:
www.bat.com
www.tobaccoinaustralia.org.au
www.globalink.org