Monday, August 1, 2016

Ceylon Tobacco – Are we about to see the import of all our cigarettes? After the Govt. intentionally destroys the Tobacco Industry!

The Double Whammy to the Tobacco Industry, A death defying tax increase, and the ban on growing tobacco by 2020! Will see the end of this Industry that employs 50,000 outgrower farmers, that indirectly feed 250,000 people.

I don’t smoke and I have never smoked. However the usual Sri Lankan practice of putting the cart before the horse, takes yet another turn. In this two pronged assault at the Tobacco Industry, one of the most efficient industries in Sri Lanka today, we are about to by Government decree to completely destroy it, due to their being NO ONE to be seen PUBLICLY to defend this.

Now the Government is JUST ABOUT TO increase taxes to prohibitive levels, to kill this GOOSE WHICH LAYS THE GOVERNMENT’S GOLDEN EGGS! The Govt. collects over Rs100B per annum, at present from just one Company, the monopoly known as Ceylon Tobacco Company, a foreign owned entity. This amount exceeds the income taxes they collect from Individuals.

We are about to see a price increase to cover the shortfall in revenue from the inability to raise VAT on health services, passed onto the Tobacco Industry as it is the easiest political explanation. See link:

Two separate issues though they are linked.

Firstly, with the tax increase in Tobacco, the consumption will fall to a level, where the Tax increase will finally result in a lower tax yield as finally consumption will fall faster, and so there will NO MORE TAX TO THE GOVT. so the whole point of the tax increase to make up the shortfall will NOT OCCUR.

So that exercise is USELESS, and for those who say, hooray, fewer people will now smoke, and so they will be healthy, and the state will not have to provide free health for smoking related illnesses, I say GET YOUR PRIORITIES RIGHT!

The Govt. just reduced the tax on Sugar, from Rs30 to 25cents! Why, so that the price of Sugar to the consumer should be kept the same, as an ESSENTIAL ITEM. This is due to the world market price of sugar rising, and the Govt. did not want to pass this burden onto the people. What a stupid decision! Sugar is AS IF NOT MORE POISENOUS than cigarette smoking in this sweet tooth Country, where sugar is fed to the spoilt children of ignorant parents who are killing their kids with kindness! Diabetes is the result of high sugar consumption, one of the highest in the world. Why has NO ONE POINTED OUT THIS IRONY, as the Govt. has lost Rs20B in taxes per annum at a stroke by NOT passing on the price increase to the public, I say, the Govt, SHOULD HAVE LET THE SUGAR PRICE RISE TO Rs130/kg and at the same time put full page ads in the Newspapers, to say SUGAR KILLS! This if they cared about the people.

I have NOW COMPLETELY DEBUNKED THE TAX THEORY  of tobacco in one stroke. Further I wish to point out that it is the middle classes who are MOST likely to reduce their cigarette smoking, and the poor will continue, and what does that mean? Less disposable income for the family, and the wife and children will continue to starve, as the husband who now gives Rs15,000 from his paycheck to his wife, to feed the family, will now just give Rs12,000 and the extra Rs3,000 for his cigarettes will go direct to the Govt. a regressive TAX ON THE POOR.

Of course politicians have NO IDEA HOW THE POOR LIVE, so they are making asinine statements which the asinine MEDIA DO NOT POINT OUT as being worse than a a SICK JOKE.

Now lets come to the ban on Tobacco Growing. I have grown tobacco in my Hingurakgoda property. The CTC tobacco outgrower program is the most slick and well organized and helpful program there is, in SL today, and I have attempted to get the Govt. to adopt its practices to paddy production. Needless to say the Govt. and the departments are manned by cretins, so they don’t even understand the point, let alone emulate from the masters at outgrowing. 

CTC knows each day the extent of land, the number of plants, the age of each plant, the quality of the growth, and approximate harvest date, along with help in the drying of the leaf AT EACH OF ITS GROWERS in every part of the Country, and now the Govt. want to destroy this as they say, tobacco harms the soil! Another absurd argument. First destroy ALL OTHER PRACTICES that harm the soil, before attacking tobacco that actually provides a living to poor farmer families more than any other agricultural crop.

My point is to provide the alternatives that are better. It is like asking the poppy farmers in Afghanistan to stop growing poppies, before providing them with an alternative form of livelihood that will compensate for their loss. 

Our jokers (those who pretend to rule us) don’t understand that simple principle. 

Finally this will end the whole agri-industry of tobacco, in SL, and take it overseas, and our cigarettes will be IMPORTED worsening our balance of payments. CTC as a business will not be affected, as it will make more money, but SL will NOT get any taxes like they do now due to the transfer pricing they will adopt, that will show NO PROFITS WILL ACCRUE TO SL by distribution of cigarettes in SL. The Govt. will NOT be able to enforce a change to this or impose imputed taxes because they will affect their tax yield further from cigarette direct taxes, and if they pull out from this Country completely, the Cowboys in the form of the Politicians and their cronies are ready to pounce on this cash cow, to fleece the state and line their pockets at the expense of the people.

YOU THE PEOPLE, WE MUST FIX WHAT IS BROKEN FIRST, ONLY THEN TRY TO IMPROVE THE LIFESTYLE. It is not by taxing tobacco, or banning growing, it is simply by providing an alternative that is better for the people, that people will stop smoking and getting addicted to this weed. Drugs and Kerala Ganja is a far bigger problem, neither of which is bringing any revenue to the Exchequer, go against this first, before attacking tobacco. Why is it not being done? The politicians are the people who benefit from the drug trade, and are paid BIG MONEY TO KEEP QUIET. 

Worse we will have cigarette smuggling on a LARGE scale. Why are the politicians bent on destroying Sri Lanka at every step. Is CTC not paying a big enough bribe to them, so they take revenge by closing it down?   


Anonymous said...

The important point is to have a holistic argument for consumption taxes that applies accross the board and is NOT discriminatory. Look at Beedi and Cigarettes for example and make the social case for differential taxes or not. What about the health issues of both?

Similarly on Low alcohol beers and high alcohol spirits, this too is blurred as far as using taxation to affect social behavior.

Above all there must be a policy that is consistantly adopted if Companies are to pursue future strategies. Currently everything is in limbo, on someone's heresay, to believe or ignore at your peril

Ratmale,Minneriya,Sri Lanka said...

This is a Daily Mirror Editorial of 16th August 2016 which goes completely against my premise.

I believe one of the points to note here is the use of facts of the word ability to pay or as a percentage of spending power to justify the tax increase implying it will NOT result in a total tax decline.

It goes along to say that the poor will cut down on smoking, which goes against my premise that it is the better off who for financial reasons will cut down on smoking and the poor will suffer even more as they will spend less on their families whilst feeding their smoking habit.

What is at stake here is practices aimed at educating people to stop smoking. Not use taxation as a means to regressively hurth the poor. In essence that HUGE point is missed in the Editorial which just says that smoking kills 20,000 a year and implies that the increase in tax will reduce that.

Then at the same breadth say increase sugar tax by 100% so that we can reduce the 20,000 deaths per year attributed to Diabetes.

We can go on arguing about this till the cows come home, but tackle the reduction of smoking and eating sugar separately from using the tax as a means to do so. It is the most vulnerable in society that you are hurting by your taxation to stop consumption model!