KINGSTON, Jamaica — Carreras Limited says it notes, with grave concern, the release from the Ministry of Health advising that portfolio minister Dr Christopher Tufton and his team are actively evaluating the World Health Organisation’s call for heavy taxation on the tobacco industry.

 “Even more alarming, is the release’s reference to a report from the WHO noting that if countries raised cigarette taxes by about 80 cents per pack, annual tax revenues could increase by 47 per cent, amounting to an additional $140 billion per year,” Carreras said in a release.

The organisation argued that the perspective that the demand for tobacco products will be stemmed by higher prices from heavy taxation is an erroneous one.

“The truth is when prices are too high in comparison with the available income and what people are willing to pay, the opportunity and incentive for the illicit trade in cigarettes increases. This scenario is the current reality in Jamaica as years of successive and excessive levels of increase in tobacco excise, has led to an exponential increase in the presence of illegal cigarettes and a dramatic decline in legal cigarette volumes.

“In just under 10 years, the legal market has declined by 100 per cent with the volumes lost going directly to the illicit trade. Within this period as well, the Government has been getting significantly less revenues from a declining legal market as a result of the illicit trade. On an annual basis, we currently estimate this loss of revenues to the Government to be almost $2 billion Jamaican,” Carreras reasoned. 

The company said it also believes that it has been carrying a more than reasonable tax burden in view of the very sharp and consecutive levels of increase in excise it has had to grapple with over the last several fiscal years. 

“This call for heavier taxation on cigarettes must therefore be viewed in light of the excessive levels and timing of excise increases, with the most recent increase effected in this current fiscal year. 

“We therefore wish to emphasise that we are now at a definitive point, where any further increases will imply a precipitous decline in revenues for the Government, contrary to the WHO’s report that heavy taxation will bring in greater revenue,” the tobacco company added in its release. 

“We wish to also highlight to Minister Tufton, that heavy taxation and the resultant effect of a thriving illicit trade in cigarettes significantly stymie efforts of tobacco control regulations, including preventing youth access to cigarettes, pack heath warning requirements,  as well as the quality of the illicit products cannot be verified.

“We are therefore urging the minister and the Government, that in any evaluation and contemplation of further increases in tobacco excise, to consider the growing negative consequences of the ongoing transfer of volumes from the legal to the illegal trade due to affordability issues stemming from the hikes in excise, which no doubt redound to the detriment of the Government’s tax collection and regulation efforts.

We also continue to emphasise our willingness to sit down with the Government in crafting a sustainable excise strategy towards meeting its revenue targets for the fiscal year 2017/2018.”