How to end tobacco use for good: What SA’s Covid-19 tobacco ban has taught usACTA
- Local tobacco companies’ market share quadrupled during the country’s temporary sales ban in 2020, overtaking Big Tobacco’s pre-ban near-monopoly on South Africa’s tobacco industry.
- The sales ban did cause people to smoke less and prevented more than 2 000 tobacco-related deaths, but at the expense of progress made to curb illicit trade in the country by the South African Revenue Service.
- Hiking excise taxes would probably have had the same results and the taxman would not have lost R5.8-billion.
Local tobacco companies were coining it during South Africa’s tobacco sales ban – their share of local sales quadrupled during the temporary ban put in place in 2020, shows an analysis by researchers at the University of Cape Town’s Research Unit on the Economics of Excisable Products, REEP.
The government banned the sale of tobacco products between 27 March and 18 August 2020 in a controversial move to stem the spread of SARS-CoV-2, the virus that causes Covid-19.
But more than a year later, local researchers have shown that although the temporary ban decreased the number of smokers in the country somewhat, it also reversed the gains made by the South African Revenue Service (Sars) to curb the illicit cigarette trade.
Nonetheless, the Covid-era policy experiment holds important lessons for the public health lobby, for whom the ultimate goal is to eradicate tobacco use completely.
How the tobacco sales ban started
Government officials justified the four-month long sales ban with an ever-expanding list of reasons including concerns that smokers may be at an increased risk of becoming severely ill with Covid-19 as a result of the lung damage caused by tobacco use.
There were also concerns that people often share hand-rolled smokes, putting them at risk of exposure to SARS-CoV-2 through an infected person’s saliva (since “when people zol they put saliva on the paper”, the Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma famously put it at the time).
Additional goals of the ban were to get people to quit smoking and to take pressure off hospitals overflowing with Covid-19 patients.
Did the tobacco ban lead to a decline in smoking?
Not only did the number of smokers in the country shrink (by between 9 and 15%) during the sales ban, even people who didn’t quit were still smoking fewer sticks per day. Smokers dropped their usage from an average of nearly eight cigarettes to six and a half per day.
But this was only a temporary win since the average daily usage shot back up to just below nine daily cigarettes per person when the ban was lifted.
These calculations were published in February as part of the 2020 National Income Dynamics Study (NIDS), which included a series of surveys, called the Coronavirus Rapid Mobile Survey (CRAM), which evaluated the impact of the Covid-19 pandemic.
The sample sizes of the surveys are, however, only broadly representative of the adult population in South Africa since it only applies to people of 18 years and older with whom researchers followed up from the 2017 NIDS study.
On the whole, the researchers estimate that the legal tobacco market shrunk by 30% during the lockdown tobacco ban, when sales were illegal.
Although there is no independent data on the size of the tobacco market at the start of the pandemic in 2020, statistics from the 2017 NIDS estimated that about 19.5-million cigarette sticks were sold in that year. That shrunk to about 13.6-million during the tobacco ban.
Were any lives saved?
All the surveys rely, however, on people to tell researchers how much they smoke. The authors caution that people often underplay how much they consume when it comes to substances such as tobacco and alcohol.
Despite these concerns, based on the 2017 figure, the ban may still have prevented up to 2 300 future tobacco-related deaths because after the sales ban was lifted the market bounced back to a slightly lower level than before the start of the sales ban.
If the cigarette market stays at this level, an additional 900 premature deaths will be prevented each year as well.
Researchers made that calculation based on the finding from a US and Canada-based study that found that one person dies of a tobacco-related disease (such as lung or heart disease) for every one million cigarettes smoked.
In South Africa, a study conducted by doctors at one Western Cape regional hospital found that the number of patients who need hospital treatment for severe chronic obstructive pulmonary disease (a lung disease that makes it hard to breathe and that is often caused by smoking) dropped dramatically (by 70%) during the tobacco sales ban when compared to the same period in 2019 – this opened up beds in the hospital’s emergency department that could be used for Covid-19 patients.
But the study, published in February in the African Journal of Primary Healthcare and Family Medicine, did not control for all the factors (for instance, mask wearing) that may coincidentally have contributed to the drop in these cases.
One step forward, two steps back: Was a ban the best way to make fewer people smoke during lockdown?
The health benefits of the tobacco sales ban during March and August could probably also have been achieved through a significant increase in excise taxes at the start of lockdown, the REEP study authors argue.
Why? Because excise taxes, which also result in higher cigarette prices generally, lead to lower tobacco consumption. For example, these taxes had a huge impact on tobacco use in South Africa between 1994 and 2004, University of Cape Town research found, and caused cigarette consumption to drop by 30% in that decade.
Had the government substantially increased the excise tax on tobacco at the start of lockdown, this money could then have gone into government coffers or to support the Covid-19 response. Instead, nearly R 5.8-billion was lost to the taxman and the illicit trade boomed, the NIDS-CRAM study shows.
The ban also undid the progress Sars made in 2019 to curb illicit trade.
What’s more, the sales ban allowed local cigarette manufacturers such as Gold Leaf Tobacco, Amalgamated Tobacco and Carnilinx to increase their turnover multiple times because they could charge inflated prices for their products during the ban and because they were able to sell additional volumes of cigarettes illegally through distribution channels that were already established, and likely
Even though the sale of cigarettes was banned in South Africa, the government allowed the tobacco industry to produce cigarettes “for the export market”. So, during the sales ban period the tobacco industry exported substantially larger volumes to neighbouring countries than usual, says REEP director Corné van Walbeek.
He explains: “In fact, the volumes that were ‘exported’ were substantially more than the volumes that smokers in these countries ordinarily smoked. It is likely that a substantial proportion of cigarettes were either smuggled back into South Africa, or were never exported. Because exports are not subject to excise tax by ‘exporting’ these cigarettes, tobacco companies also avoided paying these taxes.
But the Fair Trade Independent Tobacco Association (Fita), which represents local companies, denied that its members profited from the ban. Its chairperson, Sinenhlanhla Mnguni, explains: “There is no factual evidence that implies that the members of Fita were involved in any illicit trade and in the event that the cigarette brands associated with the members of Fita were being sold during the tobacco sales ban, our members cannot be held liable.
“We can categorically state that Fita members are compliant with the tax laws of the Republic of South Africa. All our members’ exports during the period under the lockdown period within which exports were permitted were at all times strictly supervised and controlled by officials of the South African Revenue Service.”
Mnguni also argues that the sampling of UCT research was imperfect because it was conducted online during lockdown, which can skew results.
REEP’s earlier research was done online but this critique doesn’t apply to the NIDS-CRAM data.
But the illegal sales frenzy did upend a longstanding fight for the Rands of the country’s tobacco users, a battle which has been raging between local producers and Big Tobacco companies such as British American Tobacco, Philip Morris International, and Japan Tobacco International.
After the ban ended, local companies’ market share was still double what it was before the ban.
The REEP authors, however, maintain: “There are no angels in the industry: All tobacco companies, both the multinationals and the locally-based companies, have been accused, and have been found guilty of, various kinds of wrongdoing.”
What lessons can SA learn from this?
Sales bans such as the one South Africa implemented in 2020 are a tobacco “endgame” strategy which aim to abolish tobacco use completely – but these kinds of plans have rarely been researched.
South Africa has provided researchers with a case study. Here’s what they learnt.
- Tobacco sales bans alone may increase illicit trade
Researchers now know that banning the sale of tobacco products without simultaneously also restricting supply chains and manufacturing is a bad way to approach such a policy, according to a 2021 study published in the journal Tobacco Control.
In countries such as South Africa where cigarette consumption is still high and the illicit trade is uncontrolled, banning sales will only inflate the illicit trade, the researchers argue.
South Africa is yet to ratify the World Health Organisation’s Protocol to Eliminate the Illicit Trade in Tobacco Products. One of the strategies recommended in the Protocol is a “track and trace” system which uses digital stamps to curb smuggling. Sars opened the tenders for this system in 2019 but it was extended multiple times and eventually cancelled.
Meanwhile, the country is also ramping up to impose tighter restrictions on the tobacco industry through its Control of Tobacco Products and Electronic Delivery Systems Bill.
The bill proposes harsh new rules for tobacco products and devices such as e-cigarettes and heated tobacco products that include plain packaging regulations and bans on public smoking that could result in fines and even jail time for rule-breakers. The revised bill has not been made public since submissions to the proposed legislation closed in 2018 but the health department has said it will proceed to cabinet to be greenlit.
REEP researchers argue the illicit trade that was caused by the sales ban has created a “difficult situation” that will likely slow down tobacco control efforts implemented in future.
- Price hikes work
REEp research conducted during the sales ban (when prices increased by more than 200% compared to 2017 prices) shows that rapid increases in the price of cigarettes is one of the strongest incentives to stop smoking.
Researchers believe the tobacco industry can also likely handle steeper excise rates, given their robust recovery from the sales ban.
Steep price increases for tobacco products worked well in Australia, explained REEP director Corne van Walbeek in a May webinar hosted by the public health organisations such as the South African Medical Research Council, and the Cancer Association of South Africa.
That country’s government imposed a series of tax increases of 12.5% on cigarettes for four consecutive years starting in 2013.The impact was so strong that they imposed another series of tax increases for another four years, starting in 2017.
The number of smokers in the country decreased as soon as the first price hike was in place, a 2019 study published in The Lancet found. Researchers argue that this shows that some smokers were influenced to quit the habit by the mere knowledge that the price of cigarettes would continue to increase in coming years.
Source: Health 24