EghtesadOnline: The Health Ministry has slammed the Iranian Tobacco Planning and Supervision Center's recent approval of new cigarette and tobacco brands.
The center, affiliated to the Ministry of Industries, Mining and Trade, recently issued permits for 15 new cigarette brands and 30 new tobacco brands, requested by 28 tobacco companies.
Deputy Health Minister Alireza Raeisi said the decision is against the law and even shows contempt for Iran’s commitments to the World Health Organization, according to Financial Tribune.
“According to the guidelines of the National Tobacco Control Headquarters drawn up in its ninth meeting in the fiscal 2014-15, adding flavor and taste to tobacco products and registering new brands is banned and amounts to cigarette advertising. Note 3 of Clause 102 of the Fifth Five-Year Development Plan [2011-16] proposed the setting up of 20 tobacco factories to meet domestic demand,” Raeesi was quoted as saying by the Persian-language daily Etemad.
“The Industries Ministry keeps on issuing new permits for the production of tobacco on the pretext of rising consumption and smuggling. Meanwhile, supervisory authorities have failed to address health concerns and the Industries Ministry pursues its development policies for the tobacco industry.”
The Ministry of Industries, Mining and Trade estimates that 6.96 billion cigarettes were smuggled into the country during the seven months to Oct. 22, indicating a 48% decline compared with the estimated figure of last year’s similar period.
The ministry's estimates for cigarette consumption stands at 37.91 billion for the seven months, indicating no year-on-year change, Fars News Agency reported.
The rise in the prices of cigarettes over the past two years following the growth in consumer inflation and an increase in the value of the US dollar, Raeesi said, has led to a significant decline in tobacco consumption, particularly among women and students (economically-dependent population).
According to the Statistical Center of Iran's later report, the Consumer Price Index of “tobacco” group in the 12-month period leading to Nov. 21 grew 64.9% compared with last year’s corresponding period.
Cigarette Mafia Wields Power
Last week, Raeesi also talked of influence peddling among big-money interests, the so-called cigarette mafia, to thwart plans to raise tariffs on cigarettes.
“As we speak, Iran has the cheapest cigarettes in the world. The lowest rate of tax is being imposed on tobacco products in Iran whereas there is definitive evidence that tobacco tariffs reduce smoking. But thanks to the influence exercised by the powerful cigarette mafia in the country, our proposal to the parliament on raising cigarette tax by 10% that could generate 200 trillion rials [$1.55 billion] in revenues for the country was rejected. The United States has sanctioned imports of pharmaceuticals needed by our people, yet a couple of its major tobacco companies keep on selling cigarettes to us,” he said.
The government has targeted 8,087 billion rials ($62.68 million) from tariffs on cigarette imports next year (March 2020-21). A total of 20,014 billion rials ($155.14 million) are also projected to be generated from tax on cigarette consumption as per the new budget bill for the next Iranian year (starting March 20, 2020).
Noting that over the past 10 years, tobacco consumption has increased from 2,000 tons to 15,000 tons per year, Associate Dean of Tehran University of Medical Sciences Abdolrahman Rostamian said the government and parliament need to take effective measures on raising tax on harmful products, including cigarettes.
Director of Iran National Tax Administration Omid Ali Parsa, though, says INTA has no intention to increase cigarette taxes.
Tax on domestically produced cigarettes stands at 20%. For foreign brands, the tax rate is 30%.
Earlier, Mohammad Reza Masjedi, the secretary-general of Iranian Anti-Tobacco Association, had also warned against the $316 million invested by foreign companies in Iran for cigarette production.
“Statistics show more than 95% of cigarettes smoked in Iran are produced locally and cigarette smuggling has dropped sharply in recent years. The Iranian Tobacco Planning and Supervision Center also says annual cigarette consumption is between 65 and 75 billion,” he said.
Masjedi noted that the former head of the center, Ali-Asghar Ramzi, had put cigarette consumption at 55 billion in the year ending March 2018 whereas its current director, Ataollah Maroufkhani, speaks of a questionable 36% rise in cigarette consumption.
“Such a figure is misguided and justifies the development of tobacco industry. The Iranian Tobacco Planning and Supervision Center is in effect making a mockery of Iran's health system with the approval of permits for production of new cigarette brands,” he said.
Health Risks, Economic Cost
Iranians buy 100 trillion rials (about $775.19 million) worth of cigarettes annually and spend 350 trillion rials ($2.71billion) on treatment of smoking-related diseases, according to Rostamian.
Smoking is to blame for 90% of cancers, including lung cancer as well as 25% of deaths caused by coronary heart diseases.
“Although Iran has been a member of the World Health Organization Framework Convention on Tobacco Control for 12 years now, it fails to implement some of its articles, including the ban on selling tobacco products to persons under the age of 18,” Rostamian said.
Heavy taxation is highly effective in reducing cigarette consumption. This approach has worked in poor countries as well as in rich ones and will work in Iran too, the head of Tobacco Control Research Center of the Iranian Anti-Tobacco Association told Financial Tribune last year.
“There are about one billion smokers in the world, 80% of this population live in low- and middle-income countries. One out of 30 Iranian teenagers smokes a cigarette or hookah. One in 20 hospital beds in Iran are occupied by someone suffering from the adverse effects of smoking. Smoking among Iranian teenage girls has more than doubled to reach 2.1% in recent years,” Nassir Dehqan said.
Noting that seven million global deaths on average are attributed to smoking, the official said, “In Iran, about 50,000 people die from cigarette-triggered illnesses annually. Iranians spend up to 80 billion rials [$620,000] on smoking daily. The point is smoking-attributable healthcare spending [hospital care, physician and clinical services, prescription drugs, etc.] is more than twice that figure. On the other hand, cigarette smoking causes premature death and lost productivity: life expectancy for smokers is at least 15 years shorter than for nonsmokers.”
Dehqan believes the success of rich countries has proved that a combination of taxes and public-health education would get people to stop smoking.
“Studies show a 10% rise in tobacco tax results in around 4% decrease in cigarette consumption in countries with high levels of per capita GDP and a 5% decline in low- and middle-income countries," the physician said.
“Cigarette tax stands at around 70% in 34 countries. Iran is among the 10% most affordable countries to smokers. It has been ranked the 181st expensive country in the world to buy cigarettes.”
Article 6 of the Framework Convention on Tobacco Control mandates effective taxes on tobacco products leading to higher prices, which not only help reduce consumption and demand, but also cuts governments’ healthcare costs associated with tobacco consumption. It recommends a big increase in cigarette tax to reduce consumption.
“Revenues gained from tobacco tax should be spent on preventing tobacco use, particularly among students,” Rostamian was quoted as saying by Mehr News Agency.
Domestic cigarette production meets more than 90% of demand in Iran.