Memorandum by Philip Morris Ltd (WP 46)
Philip Morris International[90]
welcomes this opportunity to comment on the UK Government's Public
Health White Paper Choosing Health (November 2004). As
we have previously provided comments during the Public Health
public consultation on Choosing Health, we will focus only
on two areas relating to tobacco that we believe are not fully
addressed in the White Paper and that will help the Government
achieve its public health goals.
LICENSING IS
KEY TO
EFFECTIVE REGULATION
Both at the EU and national level, we believe
that an all-inclusive licensing system is the cornerstone of comprehensive
regulation of tobacco products. A licensing system should cover
every participant in the tobacco business, including manufacturers,
importers, exporters, wholesalers, distributors and retailers.
Specific rules should be set by Government regarding each sector
of the tobacco business and licenses should be withdrawn for non-compliance
with these rules.
A licensing system will create a limited and
controlled supply network, and give governments the tools to better
prevent youth access to tobacco products, monitor information
on tobacco products and enforce product standards, curb illicit
trade in counterfeit and smuggled products and verify that only
legitimate operators are involved in the tobacco trade.
The Government is already considering some form
of licensing scheme for retailers, in which we would support a
"positive" scheme vs. a "negative" scheme.
However, we encourage the Government to consider similar schemes
for licensing the rest of the supply chain.
TAX POLICY
MUST SUPPORT
PUBLIC HEALTH
OBJECTIVES
As noted in the White Paper, the Government
has consistently used tax policy as a strategy to reduce tobacco
consumption. We support this strategy, however the current policy
discriminates against different types of tobacco products and
seriously undermines public health goals. The unequal treatment
of taxation on tobacco products has resulted in consumers switching
from higher taxed products to cheaper substitutes, such as hand
rolling tobacco (HRT).
All tobacco products are harmful and cause disease
and there is no public health justification for a taxation policy
which simply encourages consumers to switch from one type of product
to another. Taxation of tobacco products should support the Government's
policy of reducing consumption rather than encouraging switching.
We believe this is a key area where the Government can take immediate
action in support of a harm reduction strategy which also fits
in the framework of existing EU legislation. We would suggest
considering a system whereby products that are competitive and
functionally identical, eg cigarettes and HRT products, are taxed
at a similar level.
In addition, various other EU Member States
are considering—and some have already implemented—a
complementary approach to the taxation of tobacco products which
closes the price gap and encourages a reduction in the overall
consumption of tobacco products. Under this system, the weighted
average price of all available cigarettes and HRT products within
a country is calculated. This average price is then multiplied
by a percentage, eg 95%, in order to determine a reference price,
below which a tobacco product may not be sold.
We believe that the minimum reference price
is the most effective way to address the government's objectives
related to tobacco excise revenues and public health considerations.
This approach is also in line with the WHO's FCTC recommendation
(Article 6) where it asks the countries to introduce tax and price
measures as part of a comprehensive approach to reduce tobacco
consumption.
Lastly, we believe the EU internal market for
consumers is not yet functioning as intended because the original
goal of excise duty harmonization has not yet been achieved. We
recommend changing the current unsatisfactory situation by proposing
measures aimed at substantially reducing cross-border shopping
of tobacco products in the European Union until the tax levels
(excise and VAT) have come to a reasonable degree of harmonization.
Specifically, the Government should introduce
fixed limits on cross-border personal imports replacing the current
indicative limits to establish clear, simple rules that can be
adequately communicated to consumers and enforced. This should
be combined with other measures, including establishing a maximum
sales limit of cigarettes; a maximum limit for possession of cigarettes;
and requiring a licence for sending cigarettes via mail from one
country to another, in order to reduce most negative side consequences
of cross-border sales.
Thank you for the opportunity to comment on
the White Paper. Philip Morris supports efforts by the Government
and public health community to reduce the harm caused by smoking,
and we believe that effective regulation and a focused fiscal
policy can be significant contributors to this effort. Our intention
is to work cooperatively and constructively with the Health Select
Committee and others to address the issues that are of legitimate
concern to both the government and consumers. We would be happy
to provide further input or clarification on our positions on
the issues should the Committee deem it necessary.
February 2005
90 Philip Morris International Management S.A. is
responsible for the administrative functions of the tobacco businesses
of affiliates of Philip Morris International Inc. including in
the United Kingdom. Back
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