The TOBACCO DEBATE
It is becoming quite clear that Sri
Lanka does not have a clear policy to manage the use, abuse, control, and
eventual weaning of our citizens from the supposedly bad habit of cigarette
smoking that is claimed to be the No 1 killer in Sri Lanka today.
I use the word ‘supposedly’ because I have to believe that the link below is
accurate as it was written by the Chairman of the National Authority on Tobacco
and Alcohol, Dr Palitha Abeykoon in today’s Daily Mirror (Dec 22nd 2016) http://www.dailymirror.lk/article/The-Changing-Landscape-of-Tobacco-in-Sri-Lanka-121086.html
The reason I use this word was that in
the same paper today, there was an article on Oral Cancer, Prevention and
Awareness that puts Oral Cancer as the No 1 cancer in Sri Lanka.
Unusually for one day, we also had an article on the missing Heroin that is
detected, confiscated and gets back into the market!
On a related note, in today’s FT we had
the news of the detection of illegal cigarettes valued at Rs75M. see link http://www.ft.lk/article/586985/Customs-seizes-1-3-million-Chinese-cigarettes
What is clear to one who has devoted
this blog over the past 9 years www.kalpanakaranna.blogspot.com
with 2500 pages of advice on how to improve the quality of life of people
fortunate to live in this Serendipitous isle of Sri Lanka, is that those in
power and with authority continue to do what is in their personal agendas to
actually reduce the quality of life of those who live here, which by default,
results in the continuous emigration of the best and brightest to other lands
to and thereby ensure we have NO chance of achieving our birthright of enjoying
living in Sri Lanka.
WHY COME TO SUCH A CONCLUSION
When one reads my blog entries on this
particular topic of the Tobacco Debate on my past blog entries recently, namely
http://kalpanakaranna.blogspot.com/2016/11/consistent-policy-is-not-something-you.html
and http://kalpanakaranna.blogspot.com/2016/08/ceylon-tobacco-are-about-to-see-import.html
one can understand the gist of it.
In referring to yesterday’s FT article, http://www.ft.lk/article/586825/Rs--15-b-Govt--revenue-up-in-smoke-in-4Q-after-excessive-taxation-on-tobacco
which clearly shows the massive drop in
Government Revenue from Tobacco Taxes which I predicted vociferously in the
previous blog entries referred to above, but which fell on deaf ears, due to
obstinacy of the decision makers who were sold some cock and bull by Nishan de
Mel of Verite Research that there was lot more scope for Tobacco Tax increases
WITHOUT a drop in overall tax yield from his comparative studies of other
Countries. I don’t need to explain here why his analysis was fundamentally
flawed, but coming from an Oxford educated person, our uneducated leaders
somehow are impressed!
Lets take a holistic approach to the
issue at hand, repeating some of the points I have already made for the reader
of this blog entry. I will tackle this issue on two fronts. Firstly in terms of
raising Taxation Revenue, and secondly in terms of reducing the population’s
proclivity of knowingly self-harming, to reduce the Nations expenditure on
Health Care, and reduce the productivity of its Citizens arising therefrom.
What does Sri Lanka want in 2017? They
need to raise as much taxation revenue as possible in order to both reduce its
deficit to acceptable levels, and ensure it is able to refinance international
borrowings at lower interest rates, by gaining business confidence of lenders,
which is reflected in the strength of Sovereign Ratings. The raising of the
Tobacco Taxes to unacceptable levels has effectively killed the goose that laid
the Government’s Golden Egg. Namely ONE tax payer who contributed the largest
to the State Coffers, Rs100B per annum, is now contributing substantially less
due to this miscalculation.
On the second front on Health, and I
wish to disagree completely with the
Chairman of the National Authority that the steps taken have actually
contributed more to the increase in illness, because, not only is there a shift
to a greater emphasis of chewing betel and arecanut, a move into less healthy
beedi, even illegal cannabis, but also the shift to filter less and cheaper
cigarettes in the form of Capstan all which combined lead to a more dangerous
and uncontrolled usage of substances that can be exceedingly harmful, which
will NOT lead to a lower death rate, but arguably a much higher level of
suffering.
If the above link on the smuggling of
cigarettes is a forewarning, we are likely to see more Politically sponsored
smuggling, leading to an erosion of the moral fabric, and fall in state revenue
from Tobacco. Worse if smuggling continues unabated, it will result in Ceylon
Tobacco calling it quits in Sri Lanka, leaving the field open to the state
sponsored COWBOYS to take over, turning a highly regulated industry into one
that is NOT regulated!
I don’t need to emphasize the employment
loss in the rural areas arising from livelihood of farmers, who have to move
from a predictable and well managed cultivation, to a totally uncertain
environment of livelihood in agriculture. In a country that is trying to
discourage imports, and increase exports, this is another body blow, as we will
begin importing cigarettes as well! An about turn from the direction we are
supposed to be going to.
Of course the allied costs of lack of confidence
of investors of unpredictable state policies that can reduce a highly competent
and established business to its knees, are immeasurable. This kind of schizophrenic
law making that bears NO relation to what is best for Sri Lanka as a whole will
lead to a reversal of every good intention, as words and actions have NO
congruity.
MY PERSONAL INTEREST
In case the reader believes I have a
vested interest in this argument, I must repeat I have NO interest in
protecting Ceylon Tobacco, I am only seeking justice and fair play in Business
that has the Country’s best interest at heart.
Just for the record my grandfather HAJ
Hulugalle was a director of CTC, and he was friendly with Lord Aldington who
was possibly Chairman of BAT in days gone by perhaps 50 years ago. More
recently my Uncle SK Wickremasinghe was Chairman of Ceylon Tobacco too, before
being posted to London as the High Commissioner. I as a UK qualified Chartered
Accountant was involved in the audit of some BAT subsidiaries in London, when I
worked there for 11 years, and have some knowledge of how the business model of
Tobacco has been developing over the years where it has become concentrated in
a few players.
After all prior to consolidation, Imperial Tobacco financed the
establishment of Bristol University which I attended, and have therefore
indirectly benefited from their largesse! I have never smoked though, but might
be persuaded to start now, as the product is now so exclusive to only a few who
wish to flash their ability to afford a cigarette, the only means by which
sales would increase in an increasingly irrational world. It is time CTC also
sell a pack of Cigarettes at Rs5000 a packet, because they can recoup their
lost profits by such means, and there will be many of the irrational elite who
would like to show off smoking those packets! Wouldn’t that be a laugh?
It is time the Government engages with
the Ceylon Tobacco Company in a positive manner, instead of giving them the
cold shoulder, so that we mutually benefit from their continued existence in
Sri Lanka. Once the decision is made in London to leave Sri Lanka, there is NO
point in trying to chase the horse, which has bolted out of the barn door! We
in Sri Lanka can never go fast enough to catch the horse!
