Why Tobacco Isn’t Going Away
June 10, 2018
Last Monday, the 90-day grace ended and new excise on alcoholic beverages and tobacco came into effect.
Health proponents steaming at the havoc of alcohol and cigarettes have praised the excise, manufacturers have cursed it, but not everyone is quite happy.
The bottomline: considering people’s choices, preferences and spending power, tobacco and alcohol aren’t going anywhere soon, and the anti-tobacco fight still has a long way to go in Nigeria.
The excise upward review announced by the finance minister Kemi Adeosun in March is what extra duty the government has tacked onto every stick of cigarette and centilitre of alcoholic beverage produced in Nigeria.
As a rule, producers pay excise at point of manufacture and then charge higher prices at point of sale.
But this excise is spread over three years—gradually increasing from 208 till 2020—to moderate the impact on prices of alcohol and cigarettes, according to Adeosun.
It is double barrelled—raising government revenue and reducing the health hazards associated with tobacco and alcohol use.
How the new duty came about is steeped in finance speak. Basically, cigarette manufacturers now pay an extra N1 duty on every stick produced this year—that’s N20 on a regular 20-stick pack. The duty rises to N2 per stick next year and N2.90 a stick by 2019.
Meaning: by 2019, makers of cigarettes will pay N58 duty on every pack and transfer that cost to smokers.
A bit on beverages, though. Under the same excise regime, brewers will pay 30k for each cl of beer and stout produced in Nigeria. By next year and until 2020, the cost rises to 35k per litre.
Wine makers in the country will pay N1.25 in excise duty for each cl this year.
Wines will attract N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl is approved for spirits in 2018, N1.75k per Cl in 2019 and N2 per Cl in 2020.
Now back to cigarettes. Already 20-stick packs of cigarettes have tacked on new prices. A combination of higher prices, ban of sale to minors and insistence of selling in packs was meant to discourage buying.
Sellers began charging new unit prices per stick even before the excise came into effect, and they reduced the number of sticks per sale. Instead of N10 per stick, they sell four sticks for N50, and N250 for a pack.
That doesn’t even touch the prohibitive prices that deters smoking in richer societies. A similar average 20-stick pack in Switzerland cost N3,202—more than 10-fold.
Cumulatively, excise on tobacco accounts for 23.2% of total cost of the product in Nigeria. Other Africa countries have made the cost higher— 38.1% in Algeria, 36.5% in South Africa and 30% in Gambia—to bite harder on tobacco companies who could potentially see smokers dump their products due to prohibitive costs. The World Health Organisation recommends 70%.
Already, the smoking public in Nigeria is estimated at around 4.5 million adults by the latest tobacco survey. And they puff some 20 billion cigarettes each year. Fewer cigarettes than that number are produced in Nigeria; the rest have to be imported.
Another 6.4 million are exposed to smokers and secondhand smoke.
Considering the diseases that have become linked to tobacco, global health authorities have labelled tobacco use and its consequences as one of the biggest public-health threats the world has ever faced.
Tobacco kills more than half its users—that’s more than 7 million deaths each year.
Six million of those killed are the result of direct tobacco use; around 890,000 are non-smokers exposed to secondhand smoke.
And eight in 10 of the 1.1 billion smokers worldwide live in low- and middle-income countries—like right here.
Tobacco users who die prematurely deprive their families of income, raise the cost of health care and hinder economic development. That’s some case to make for a more aggressive fight on tobacco.
The rise in excise is the latest and boldest move on tobacco yet, experts say. Tobacco control still entails creating smoke-free zones, ban on smoking in public places, ban on promotion, sales and advertising, restrictions on packaging. All those are yet to get major teeth. The excise is the gum to start with.