Betreff: National Council Against Smoking Press Release
Von: "Yussuf Saloojee"
Datum: 22.07.2020, 07:27
An: joossens@gmail.com


Hi Luk,

A brief response as to why I think the study by the University of Cape Town (UCT) is of little value..

1) The UCT survey is not nationally representative.   So its findings are not generalisable to the population.  It tells us the views of those who took part in the study but does not give a picture of the national situation. The poor are grossly under-representerad in the survey and opponents of the ban are over-represented.    The study actively recruited respondents  from a website (change.org) which encouraged people to sign a petition against the ban.  To paraphrase computer scientists:  ”Poor data leads to poor conclusions”.
 
Moreover, the findings of the UCT study are at variance with other surveys which found much greater compliance with, and public support for, the ban.  Repeated surveys  by the University of Johannesburg/Human Sciences Research Council found that about 75% of the public were in favour of the ban.  Tellingly, one survey found that 39% of smokers supported the ban, so the divide was not just between smokers and nonsmokers

2.  The UCT study data does not add up. It reports that cigaretts prices increased by 250% during the lockdown, but that cigarette consumption decreased by only 20%, and that 9% of smokers stopped smoking. The price elasticity of cigarettes is around - 0.5% in South Africa.  That is, a 1% increase in price reduces consumption by 0.5%.  So the massive 25 fold increase in prices should have produced a 125% decrease in consumption and more than a 9% drop in prevalence. Add to this, a large decrease in income, increased unemployment and the poor not having money to buy sufficient food.

 I am not an economist, but this confirms that the sample is skewed towards those who are price insensitive.

3.  The ban was a temporary response to an emergency in which smoking worsened the prognosis for people infected with sars-cov-2. The aim was to reduce the pressures on an already overburdened health system. The high court found this to be a rational reason for the ban. 

The ban did though create tensions between public health and civil liberties. This was exploited by the industry, which also emphasised the illicit trade and the loss of excise revenues

The UCT team takes up this theme. It proposes that instead of a ban the government should have increased excise taxes. Prices would have still gone up but the governemnt could have clawed back some money. This is a superficially attractive proposal. 

The industry would have responsed to the tax hike in the same way it did to the ban. A media uproar, the illicit trade would have increased and there would have been profit shifting by the multinationals. Additionally, there might have been a price war, with illicit cigarettes undercutting the legal market. The seismic shifts in the market would still have occurred.

Then there would have been the problem of regressivity.  The government would have been perceived as punishing poor smokers while allowing the rich to smoke.

Finally, I think the UCT team greatly underestimates the externt of the decline in smoking. In three decades of tobacco control, the prevalence of smoking has fallen by about 50%, compared to 9% decline in three months (and that is accepting the UCT analyses which I do not).

Go well, 
Yussif





In my view, the conclusions of the UCT study are incorrect.   The industry would have the same intensives to avoid higher taxes as they would to avoid the ban and used the same tactics,
On 21 Jul 2020, at 11:57 AM, Luk Joossens wrote:

Dear all,

The University of Cape Town has published today its second report on smoking in South Africa during the lockdown.



The authors  argue that the ban was perhaps not a good idea and that higher taxes would have been better.


"We argue that, instead of imposing a sales ban to prevent people from smoking cigarettes, the government would have been able to achieve a similar outcome by substantially increasing the excise tax (from the current level of R17.40 per pack of 20 cigarettes to R50 per pack or more). Most smokers that have quit smoking during lockdown did not quit because of health concerns or because they wanted to follow the government’s regulations, but because the illegal market that was created by the lockdown made cigarettes unaffordable. Critics of a strategy to increase the excise tax substantially would argue that to do so would increase illicit trade. That may be possible, but at least it will not increase to 100%, as is currently the case. Our survey indicates that, more than anything else, the price of cigarettes made people quit during lockdown.

A substantial (for instance, 100%) immediate increase in the excise tax, followed by above- inflationary increases in subsequent years, would counteract the impact of a likely price war, once the sales ban is lifted. It would allow the National Treasury and the South African Revenue Services to claw back some of the revenue that they have lost during lockdown. Furthermore, it would encourage smokers to quit, and incentivise many quitters (who may otherwise resume smoking when the price falls to its “normal” level) to stay non-smokers. However, an important proviso for such a tax strategy is that the illicit trade in cigarettes is under control. This will be difficult, given that the illicit operators have been able to entrench themselves during the lockdown period. However, with political will and with the appropriate use of technology (such as digital tax stamps and an independent Track and Trace solution), this can be done.

In our first report we argued that, although well-intentioned at the outset, the extension of the cigarette sales ban into lockdown Level 4 was an error. Based on the results of the second survey, we believe that the further extension of the sales ban, into lockdown Level 3, amplified the error. We recommend that the government expeditiously lifts the ban on the sale of cigarettes; substantially increases the excise tax on tobacco products; and implements better tax enforcement measures." 




In my opinion, there is always a big risk if you introduce a sales ban, without preparations, in a market where illicit sales market is already well developed. 

Anyway, the findings of this report deserve a proper discussion; 

Best wishes

Luk Joossens

Brussels, Belgium






On 29 Jun 2020, at 08:14, Luk Joossens <joossens@gmail.com> wrote:

Hi Yussuf,

It is great that you won this case and I hope that you will also win the case introduced by BAT in August.

However, it should be useful to know more details on the effect of the ban when sales start again.

How many smokers stopped smoking, how many relapsed, how many bought cigarettes on the illicit market, how many remained on the illicit market, was the tobacco industry supplying the illicit market, which policies were put in place to prevent relapsing and combat illicit trade?

South Africa has excellent researchers on illicit trade at the University of Cape Town. I hope to read their findings on the impact of the ban next year.

Best

Luk Joossens