the economics of tobacco control project: how research can have policy impact seminar at the...
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The Economics of Tobacco Control Project:How research can have policy impact
Seminar at the University of Stellenbosch
Corné van Walbeekwww.tobaccoecon.org
@Tobaccoecon
Economics of Tobacco Control Project 17 August 2015
Why this presentation?
• Some personal background
• Does research have an impact on policy?
• Macroeconomic research vs. microeconomic research
• Some good fortune and good timing is required
Economics of Tobacco Control Project 17 August 2015
Why is tobacco control important?
• World-wide:– More than 1.2 billion smokers– About 6 million people worldwide die from tobacco-related diseases
each year– The burden of disease is increasingly shifting to low- and middle-
income countries
• South Africa:– About 7 million smokers (20% adult prevalence in 2013) (SANHANES,
2013, NIDS, wave 3, 2013)
– In 2000 about 44 000 people died from tobacco related diseases (Groenewald et al. 2007)
– Tobacco use was the third most important risk factor for premature death (after unsafe sex and high blood pressure) (8.5% of total deaths)
Economics of Tobacco Control Project 17 August 2015
The Framework Convention on Tobacco Control
• Adopted by the World Health Assembly in 2003
• Currently 180 countries are members of the FCTC, covering about 90% of the world’s population
• Aims to reduce tobacco use through both demand and supply measures
• Important tobacco control tools:– Increase excise tax and price (Art. 6)– Protection from exposure to tobacco smoke (“clean indoor air policies”) (Art. 8)– Tobacco product regulation and disclosures (Art. 9 & 10)– Packaging and labelling (Art. 11)– Education, communication, training and public awareness (Art. 12)– Banning tobacco advertising, promotion and sponsorship (Art. 13)– Provide cessation services (Art. 14)– Eliminate illicit trade (Art. 15)
Economics of Tobacco Control Project 17 August 2015
Why do we focus on Africa?Cigarette consumption over time in Africa
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
10
20
30
40
50
60
70
80
90
South Africa Rest of AFRO
Billi
ons
of c
igar
ettes
per
yea
r
Source: Blecher and Ross (2013)
Economics of Tobacco Control Project 17 August 2015
Why do we focus on Africa:Forecasted proportion of smokers by region
2010 2020 2030 2040 2050 2060 2070 2080 2090 21000%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AFRO AMRO EMRO EURO SEARO WPROSource: Blecher and Ross (2013)
Economics of Tobacco Control Project 17 August 2015
History of tobacco control research at UCT
• Mid- to late 1990s: – Iraj Abedian launched the first Economics of Tobacco Control
Project (within AFReC)– Research provided strong economic support to anti-tobacco
legislation of 1999
• Early 2000s:– Second phase of the Economics of Tobacco Control Project– South Africa is a role model for other developing countries,
especially for using excise tax increases as a tobacco control tool
– We also did some ad hoc evaluation the implementation of the 1999 Tobacco Products Control Amendment Act
Economics of Tobacco Control Project 17 August 2015
South Africa as a role model
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 430.00
5.00
10.00
15.00
20.00
25.00
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Real price of cigarettes (base 2008) (secondary axis) Excise tax per pack (base 2008) (secondary axis)Aggregate cigarette consumption
Reta
il pr
ice
of c
igar
ettes
and
exc
ise
tax
on c
ig-
arett
es (b
ase
2008
)
Agg
rega
te c
igar
ette
cons
umpti
on (m
illio
ns o
f pa
cks)
Economics of Tobacco Control Project 17 August 2015
Some research lessons from the early work on tobacco control
• Let the data speak– Do not try to force a result where the data does not support it
• The tobacco industry will certainly read the research– They will attack it if it deserves to be attacked
• Separate research from advocacy – Stay objective– Let the advocates use the research to push the public health
agenda– Build credibility
• Build good relationships with strategic officials in government
Economics of Tobacco Control Project 17 August 2015
The current Economics of Tobacco Control Project
• 2011-2012: American Cancer Society– Institutionalise the “ad hoc” capacity at UCT School of Economics
– Develop a self-sustaining research unit
• 2012-2017: Gates Foundation/African Tobacco Control Consortium– Scale up & out the project to increase the technical content
knowledge of the economics of tobacco control in Africa
– Increase the profile of economic & tax issues in tobacco control in Africa within the broader economic community
– Train advocates to become literate in economic & tax issues to better facilitate advocacy efforts & policy development
– Create a program to train & develop researchers in the area
Economics of Tobacco Control Project 17 August 2015
Two main project objectives
1. Scholarships to postgraduate students
2. Technical assistance and support on tobacco tax to countries or regional groupings
Economics of Tobacco Control Project 17 August 2015
• South Africa focused– The prevalence of water-pipe smoking among tertiary students in the Western
Cape (Lara Kruger)– The determinants of smoking initiation in South Africa, using survival analysis
(Nicole Vellios)– A study on the causes of the real net-of-tax increases in cigarette prices in
South Africa (Diana Nyabongo)– Declining tobacco production in South Africa: Analyzing key drivers of change
(Clarina Du Preez, University of Pretoria)
• Focused on other African regions/countries– The socioeconomics of tobacco use in the Southern African Customs
Union (Linda Nyabonga)– The impact of excise tax harmonization in the East African Community
(Jodie Posen)– Price and income elasticities of demand in Uganda (Grieve Chelwa)– Assessing the causal impact of tobacco expenditure on households’ spending
patterns in Zambia (Grieve Chelwa)
Some examples of postgraduate research
Economics of Tobacco Control Project 17 August 2015
Project Objectives (2)
• Technical assistance and support on tobacco tax– Direct to Ministries of Finance/Ministries of Health– World Bank– World Health Organization– Treaty Secretariat of the Framework Convention on
Tobacco Control – Campaign for Tobacco Free Kids (NGO)– Framework Convention Alliance (NGO)
Economics of Tobacco Control Project 17 August 2015
Some regions/countries we were involved with
• Regional blocs– East African Community
• Tax harmonization
– West African Economic and Monetary Union (WAEMU) and Economic Community of West African States (ECOWAS)
• Structural tax reform and tax harmonisation
• Individual countries – Kenya & Uganda
• Tax increases and tax structure reform
– Botswana• Introducing a levy above the SACU excise tax
– Cameroon & Chad• Tax situational analysis
Economics of Tobacco Control Project 17 August 2015
An example: Jamaica
• Goal: – Evaluate historical tax increase and modelling potential tax increase
(2005 and 2015)
• Partners: – Pan-American Health Organisation (PAHO), Jamaican Ministries of Health
and Finance
• Findings:– Until 2008 the excise tax system was unnecessarily complex, which was
exploited to the industry’s benefit– Excise tax was a Special Consumption Tax (SCT), levied as a specific tax,
but subject to additional ad valorem taxes in excess of a “base price”– The “increase” in the excise tax gave an excuse for the industry to raise
the retail price and its profits, through the fine print of the SCT– The excise tax system was greatly simplified in 2008– Since 2010 the nominal excise tax did not change, resulting is a decrease
in the real excise tax and real government revenue
The nominal and real excise tax in Jamaica
Excise tax revenues in Jamaica
Economics of Tobacco Control Project 17 August 2015
Jamaica (continued)
• Suggestions:– Simpler tax structures are better– Specific excise taxes are good but they have to be
adjusted regularly to keep pace with inflation
• Outcomes:– Jamaican government raised the excise tax from J$
210 to J$ 250 per pack in April 2015
Economics of Tobacco Control Project 17 August 2015
Another example: Ghana
• Goal: – Model tax reforms and increases on tobacco and alcohol
• Partners: – World Bank, Ghanaian Ministry of Finance
• Current tax structure: – For cigarettes: ad valorem excise tax at 150% of CIF value– For alcohol: ad valorem excise tax with tiers (based on local content)
• Findings:– For imported product the reported CIF value is very low– Total tax burden on cigarettes and alcohol is well below comparative burdens, despite
the fact that the tax sounds high
• Suggestion:– Replace ad valorem tax system with a specific tax system, adjusted in line with inflation
• Outcome:– Excise tax on cigarettes was increased to 175% of CIF value
Economics of Tobacco Control Project 17 August 2015
Main research focus areas of the ETC Project
• Tobacco control (Africa and LMIC focus)– Tax structures– Tax levels– The relationship between excise tax and
price– Illicit trade– International coordination (blocs and
economic integration)
• Alcohol policy in South Africa
Economics of Tobacco Control Project 17 August 2015
Research Highlights
Economics of Tobacco Control Project 17 August 2015
Research Highlights
Economics of Tobacco Control Project 17 August 2015
• As taxes increase, so does the incentive to avoid & evade taxes– Illicit trade has the ability to undermine tobacco control policy
objectives (reduced consumption & increased revenue)– However, the tobacco industry has an incentive to exaggerate
the extent of illicit trade
• Our research attempts to answer key questions:– What is the extent of illicit trade?– What are the trends in illicit trade?– What is the industry’s role in illicit trade?– How can governments respond to illicit trade?
Illicit trade
Economics of Tobacco Control Project 17 August 2015
Illicit trade Research Highlights
Economics of Tobacco Control Project 17 August 2015
• A new research area for us is alcohol policy
• This work is an attempt to translate experience on tobacco to alcohol
• Work is focused on South Africa at present• Collaboration with World Health
Organization driven by the policy objectives of national government (particularly Minister of Health)
Alcohol
Economics of Tobacco Control Project 17 August 2015
AlcoholResearch Highlights
For more information seewww.tobaccoecon.org
Some slides on alcohol
29
Excise taxes on alcohol and tobacco19
60/1
961
1962
/196
319
64/1
965
1966
/196
719
68/1
969
1970
/197
119
72/1
973
1974
/197
519
76/1
977
1978
/197
919
80/1
981
1982
/198
319
84/1
985
1986
/198
719
88/1
989
1990
/199
119
92/1
993
1994
/199
519
96/1
997
1998
/199
920
00/2
001
2002
/200
320
04/2
005
2006
/200
720
08/2
009
2010
/201
120
12/2
013
0
20
40
60
80
100
120
140
160
180
200
0
1
2
3
4
5
6
7
8
9
10
Real excise tax on beer, spirits and cigarettes, 1960-2013
Cigarettes (secondary axis) Beer Spirits
Financial year
Exci
se ta
x on
bee
r and
spi
rits
, Ran
d pe
r lit
re o
f pur
e al
coho
l, co
nsta
nt 2
009/
10 p
rice
s
Exci
se ta
x pe
r pac
k of
20
ciga
rett
es, c
onst
ant 2
009/
10
pric
es
30
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
0
20
40
60
80
100
120
140
160
Derived quantities of pure alcohol consumed in South Africa, 1960-2012
Beer Spirits Wine
Financial year
Qua
ntity
of p
ure
alco
hol (
mill
ion
litre
s)
31
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0
1
2
3
4
5
6
Per capita consumption of pure alcohol, by category, 1960-2011
Beer Spirits Wine
Lite
rs o
f pur
e al
coho
l con
sum
ed p
er a
dult
(15+
) per
yea
r