Tobacco Company should be priced at Rs. 29 rather than Rs. 20 at present had inflation over the last 20 years been part of the pricing formula, once again raises the issue of government revenue versus the larger interests of the people vis- -vis alcohol and tobacco. The evidence today is overwhelming that smoking kills but people continue to smoke despite being perfectly well aware of the dangers of the habit. On the flip side of the coin, the Treasury reaps enormous revenue from the huge taxes imposed on tobacco and alcohol that helps fund a major part of government expenditure. There was a story that once did the rounds of a smoker who had decided to kick the habit telling his friend of his decision. `What have you got against (then finance minister) N.M. Perera? responded the friend. `Nothing, was the reply. `But if you stop smoking, the budget would be sabotaged! The joke would apply to arrack too, given the budget s dependence for revenue on both alcohol and tobacco.
It is fairly well known that until recent years, the illegal manufacture of so-called white cigarettes prospered in this country. It has been alleged that those behind that operation of manufacturing an untaxed cigarette, marketed at a fraction of the price of the legal product, had some political patronage. Since illegal manufacturers pay no taxes on their cigarettes, and over 90% of the price of a legal product comprises government imposed taxes, they could keep a fat profit and compete with the formal industry on a massively unequal footing. Counterfeit brands too tended to enter the country almost with impunity. But in recent years there had been a marked improvement of the law enforcement effort against illegal tobacco products and Ceylon Tobacco does not tire of informing its shareholders and the public about the large number of raids that had been conducted and the results of such enforcement action. We also see the occasional newspaper picture of bonfires of seized cigarettes set ablaze. The other staple of cigarette and liquor manufacturers is to publish how many billions their industries have paid as taxes an ever growing figure over the years.
The price stick has certainly been a deterrent on smoking which today is a very expensive habit. This is true for drinking too. Successive finance ministers of different political persuasions routinely increased cigarette and arrack prices with every budget. There was once celebrated instance when Dr. N.M. Perera actually reduced the tax on cigarettes. That was to teach hoarders, cornering stocks ahead of the budget to make a killing thereafter, a good lesson. Perera first and his successors later learned to effect price increases before or after a budget via the gazette. Ceylon Tobacco has over the years reported drops in sales of cigarette volumes but increases in profits. This is due to a number of factors including what is called `industrial price increases accompanying increased taxation. There has also been increased mechanization of production, downsizing of staff numbers and other productivity improvement measures leading to beneficial results for the company and its shareholders predominantly British American Tobacco that own over 80% of Ceylon Tobacco s equity.
Just like cigarette суждениям protested about illegal competition, legitimate liquor producers have over the years screamed from the housetops about the kasippu menace that continues unabated. Just like cigarettes, the lion s share of the price that the consumer pays for a bottle of arrack (or whiskey, gin or whatever) comprises taxes that the hooch manufacturers producing rotgut do not pay. While the enforcement effort against illegal cigarettes has been quite successful, the same does not hold true for kasippu. It is obvious that at least some policemen and excise officers are in the pay of illicit liquor manufacturers and sellers as has been the case over the decades. Patrons of the illicit brews, many who have been thrown into the clutches of kasippu manufacturers by arrack being priced out of their reach, know where to find the stuff which is freely available in both town and countryside.
The legitimate liquor industry has long urged that the best way to drive kasippu out of business is to rationalize taxation of legal arrack so that the customer would be able to buy himself a decent drink at an affordable price instead of resorting to dangerous alternatives. Similarly, the so-called soft liquor manufacturers like beer brewers say that reducing taxes on their products will be an inducement for imbibers to choose soft rather than hard liquor. All these arguments by the various manufacturing interests are not without logic and government too understands the commonsense manifest in the different contentions that have been tossed around for years. However it has to also contend with the religious and health dimensions and striking the right balance between economic, moral and health considerations is obviously no easy task.
Where tobacco is concerned a degree of progress has been visible with the price deterrent probably stopping younger people acquiring the smoking habit. Health warnings are prominently displayed on cigarette packs and there are restrictions on smoking in public places although enforcement in this regard is not the best. Some experts say that many people start drinking with a glass or two of beer and then go on to hard liquor. That is a possibility that cannot be discounted. Yet, given the country s thrust into tourism, beer should not be priced exorbitantly as that can well leave visitors with a feeling that they are being ripped-off. Like biscuits,Sri Lankahas long produced quality beers locally and some international brands too are locally brewed under franchise. While our development thrust necessarily involves integrating with both the global economy and the world outside, some of our rules like the poya day ban on alcohol send out the wrong signals in tourist hotels.
On the one hand there are revenue considerations that cannot be ignored nor can the health of the people. Threats that there will be no free treatment of alcohol related disease at government hospitals can never be properly implemented. Does that also mean a smoker who has contracted lung cancer will not be admitted to the cancer hospital? No amount of legislation will stop smoking and drinking anywhere. As a respected parliamentarian once said, `you cannot legislate for public morals. What is needed is a balanced pragmatic approach to the issues and the political will to put an end to the scandalous and continuing enforcement failure against illicit liquor.
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