Health ministry is discontent about insignificant growth of cigarette prices
The Ministry of Health of the Russian Federation published a project of the Concept of State Policy Against Tobacco Consumption for 2017-2022 and further perspective, which was sent to the government for approval, on its website.
The project’s goal is to reduce tobacco consumption distribution to 25% by 2022 and create conditions for further sustainable reduction of consumption. As main target focuses, the document calls the reduction of tobacco consumption distribution in Russia by 5% by 2022, prevention of its consumption by kids, teenagers and pregnant women, prevention of distribution of new types of tobacco products, probably including the filling for hookahs and vapes, and increase the population’s awareness. In addition, one of the tasks is to gradually rise of excises on tobacco products that are to reach the average level of countries of the European region of the World Health Organization. In the health ministry’s opinion, higher prices for cigarettes and other tobacco products lead to a lower demand for tobacco.
It is noted in the project that the measures taken on to increase excises on tobacco products and fixation of retail prices for the mentioned products are very effective and profitable for the country as they are able to not only seriously influence tobacco consumption distribution, thus reducing costs on liquidation of medical and social consequences due to tobacco consumption, but also increase tax payments to the country’s budget.
In Russia in 2017, the excise rate on cigarettes is at least 2,123 rubles per 1,000 cigarettes, which is about 42 rubles per one pack, according to the Russian Tax Code. Just to compare, the health ministry puts an example of an average excise on tobacco in Europe, including former USSR countries, where the excise on one pack of cigarettes is $2,38. WHO, in turn, recommends to increase the excise rate on tobacco to 70% of its retail price, while the percentage in Russia in 2016 was just 41%.
According to the project, calculations show that higher excises on cigarettes to an average level among countries of the European region of WHO will enable to additionally attract up to 800bn rubles to the budget in comparison with taxes in 2016 and save from premature death of up to 2 million citizens. We need to note that the sum of excise taxes paid by tobacco companies in 2016 totalled 467bn rubles. So excise rates are expected to grow two times. In addition, tobacco manufacturers are also supposed to redress the damage to ecology from tobacco wastes by imposing an ecological tax on cigarettes except gradual uninterrupted rise of tobacco excises.
Without state films with cigarettes and packing rules
To save people from passive tobacco smoking, the Russian Ministry of Health offers to expand the list of places where smoking is banned. The list has included spaces for communal apartments, all types of automobile public transport and short-distance and international transportation, places that are closer than 3 metres from bus stops and entrances to shopping centres, in the underground and surface pedestrian crossings, in people’s own transport in presence of kids or near people who are against tobacco smoking. It is offered to pay great attention to education, supervision in tobacco production and several other bans. For instance, to ban any exchange of one tobacco product to another or other goods, ban granting awards like tobacco products, impose restrictions to show trademarks of tobacco companies in fiction films and ban state support of the films where tobacco products are shown or used.
The project, which was sent to the government for consideration, also tells about many times told offers to standardise the appearance of tobacco products – we are talking about the imposition of requirements for a product’s length, height, width and colour. According to the simplified standardisation, there will be one typeface and colour without trademarks and other marks identifying a brand and ads. So, packs can have only a tobacco product’s name of certain colour and typeface.
In addition, it is offered to permit the sale of tobacco products in shops whose area is more than 100 square metres only in specially designed places located at least 5 metres from cash desks. We need to note that this requirement has already been met in some shops. Some of them stopped selling tobacco at all.
They also want to ban selling tobacco products in small shops with an area of less than 50 square metres.
If approved, the changes will also affect vapes with hookahs that are offered to be banned in café and restaurants.
Demand and supply to fall
According to the health ministry, while fulfilling the Concept of State Policy Against Tobacco Consumption for 2010-2015, tobacco distribution among adults of Russia from 2009 to 2016 reduced by almost 9%, to 30,9%. A twofold fall of interest in tobacco products among 13-15-year-old teenagers was fixed in 2015 in 11 years. The availability of tobacco products also decreased two times on average. Nevertheless, now 15% of teenagers smoke. 51% of men and 14% of women smoke in the country among adults.
Statistics of Tabakprom Association of Tobacco Product Manufacturers also confirm the date on lower interest in smoking. The statistics are based on information of the Federal Service on State Statistics. In comparison with the last year, cigarette production volumes have reduced since the beginning of the year. If in January 2016, 20,3bn cigarettes were made, they are 11,4bn in 2017. 153bn smoking products were made in Russia during 6 months last year against 118,9bn cigarettes this year. In addition, the sums of paid excise duties, on the contrary, rapidly grow. The makers paid 232bn 854m rubles to the country during 6 months in 2016 and 280bn 811m rubles in 2017.
The Russian statistics service says that cigarette production reduced by almost 20% to 191bn cigarettes in 9 months this year. Cigarette production fell by 25,6% only in September.