23 July 2021 Press Statement
The Southeast Asian nations of Cambodia, Indonesia, Myanmar, and Vietnam could have prevented more than 1.3 million premature deaths from tobacco use and collected more than USD 4.81 billion in tax revenue if they had implemented effective tobacco tax measures. This finding is from the latest report, Lost Funds: A Study on the Tobacco Tax Revenue Gap in selected ASEAN countries by the Southeast Asia Tobacco Control Alliance (SEATCA). It was presented during the webinar with the same title on 23 July.
The report is an assessment of human and fiscal losses as a result of governments’ failure to implement tax measures and protect tobacco tax policies from the tobacco industry interference.
There are 122 million smokers in the ASEAN region. In Indonesia, two out of three men smoke while in Vietnam, almost half of the male population are smokers. Countries with high smoking addiction stand to be more vulnerable during the COVID-19 pandemic as smoking increases risk of more severe COVID-19 symptoms.
The pandemic has also exposed governments to reduced economic productivity and most low income countries are struggling to keep their healthcare systems afloat and address the needs of their citizens.
Despite this, the tobacco industry has employed tactics to expand its consumer base and shield itself from regulatory measures including policies on tax. These tactics include avoiding tax increases to keep cigarette prices low, delay payment of taxes, and offering private sector support to government units to gain political support.
An unfair business agreement in Lao PDR, the 25-year Investment License Agreement (ILA) signed by the government in 2001, shields the tobacco industry from paying the applicable taxes. Local tobacco companies are paying a lower tax rate and have since stopped paying a specific tax of USD 0.02 per cigarette pack, causing the Lao government to lose USD 142.9 million from 2002-2019.
In line with Article 6 of the World Health Organization Framework Convention for Tobacco Control (WHO FCTC), governments should implement long-term tobacco tax policies that will make tobacco products less affordable and dissuade the public from continuing their addiction to these products.
The revenue generated from tax policies imposed on tobacco products can also support public health goals and other development priorities. Tax policies for tobacco products should also be protected from the vested interest of the tobacco industry.
“Governments should simplify their tax system and aim to increase tobacco taxes to boost public health and make up for the revenue loss. Sanctions should also be increased and implemented accordingly to deter and address tax evasions by the tobacco industry,” highlighted Dr Hana Ross, Principal Research Officer of the Research on Economics of Excisable Products (REEP). Dr Ross is the author of the report.
The webinar also featured insights from Mr. Rodley Desmond Daniel M. Carza of Department of Health (DOH) Philippines, Mr. Rungsun Munkong of Thai Health Promotion Foundation, Ms. Sophapan Ratanachena-McWhortor, Tobacco Tax Program Manager and Dr. Mary Assunta, Senior Policy Advisor of SEATCA.
Val Bugnot, Media and Communications Officer, SEATCA
- Report: Lost Funds: A Study on the Tobacco Tax Revenue Gap in selected ASEAN countries by the Southeast Asia Tobacco Control Alliance (SEATCA)
- SEATCA Tax Index 2021
- Tobacco Tax Index 2021 Infographics
- Tobacco Industry Interference in Tobacco Tax Policies in ASEAN countries
- Guidelines on the implementation of WHO FCTC Article 6
SEATCA is a multi-sectoral non-governmental alliance promoting health and saving lives by assisting ASEAN countries to accelerate and effectively implement the tobacco control measures contained in the WHO FCTC. Acknowledged by governments, academic institutions, and civil society for its advancement of tobacco control in Southeast Asia, the WHO bestowed on SEATCA the World No Tobacco Day Award in 2004 and the WHO Director-General’s Special Recognition Award in 2014.