$$B in revenue can be lost if Tobacco Bill becomes law – DEMTOCO

Aug 03, 2017 News

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By Kiana Wilburg

It would be sensible for the Government to press the pause button on the Tobacco Control Bill and consider the far reaching implications for its Treasury. Should it become law, the Bill could actually put the Government’s $4B collection in taxes in jeopardy, according to officials attached to the Demerara Tobacco Company Limited (DEMTOCO).
The company held a press conference yesterday at the Cara Lodge Hotel to appeal to the government to send the Bill to a Special Select Committee.
DEMTOCO officials said that the Special Select Committee would give them and other stakeholders, a chance to explain their concerns regarding the Bill, including the domino effect it would have on the company, Guyanese retailers and even the national purse.
Speaking specifically to the issue were DEMTOCO’s Managing Director, Mrs Maurlain Kirton and DEMTOCO Director, Raoul Glynn.
Kirton explained that the Bill, in its current form, would affect revenue for the government. She stressed however that while the Bill may intend to deter the consumption of smoking in certain places, it does not mean that utilization would reduce. The Managing Director said that this is based on her company’s experience in other countries like Suriname, Jamaica and Trinidad.
Kirton said that a Bill that is so “harsh in measures” will have the shock effect. But consumption would only move in a different direction. The official said that it would move from the consumption of the legitimate product to smuggled contraband. Kirton said that this would obviously lead to the evasion of taxes.
The DEMTOCO Director said, “Our position is that while we say we need to be regulated, regulate it in such a way that you will still be able to extract the revenue. Sometimes we are chastised for saying we are one of the top five companies. But last year we paid $4B in total taxes. That is a fact, not a feeling.”
Kirton continued, “So if for whatever reason the Bill goes through as is…somewhere you start to lose that $4B you receive as a government. And we all live here. We understand that revenue is really what keeps your economy buoyant. And so what will happen is that consumption will move from the legal company to the underground (activities)…”
Furthermore, the officials were asked to provide an estimate of what could be the possible reduction of taxes paid to the Government based on trends in other countries.
Glynn said that in Suriname, it was 70 percent of revenue that was lost. If you look at Guyana’s situation and do the math of 70 percent of $4B, you would see what would happen, added the Director.
He added, “In Panama, 75 percent of revenue was lost but consumption remained the same. The consumption was taking place in such a manner that it was evading the tax net altogether. The government gets no part of that revenue. And what it forces the government to do is to look for taxes in other areas so as to try to make up for the revenue that it has lost.”
IMPLICATIONS FOR HEALTH
The officials were then asked if at any point, did the company consider that there is a glaring imbalance between the revenue received from the tobacco sector and the exorbitant costs and strain placed on the health sector to deal with the implications of the sector.
To this, Kirton said that it depends on how one looks at it. She challenged the unavailability of key data which can show and/or justify that anyone who passed away from a certain illness, that it was directly related to tobacco consumption.
She noted, however, that the company is not testing this line of argument. Kirton said that the entity is contesting the design of the regulations and how they will be enforced.
“We are selling an adult product and what you are doing is basically criminalizing a smoker. On one hand you are saying that you guys can still sell and make money and then you put certain restrictions in place where it is so harsh it makes it virtually impossible for commercial work to take place or consumption,” Kirton stressed.
TOBACCO BILL
In a matter of nine months, Guyana will be preparing to implement one of the most regimented health laws it has ever had in recent times—the Tobacco Control Bill.
The Bill proposes a number of strict penalties and fines for law breakers; it will seek to encourage a new behavioural pattern amongst Guyanese.
The Bill will allow for officers authorized by the Ministry of Public Health to be vested with the power to carry out any inspection, investigation or enforcement for the purposes of the Bill.
Any person who denies, obstructs or hinders an authorized officer in carrying out his or her duties; or knowingly makes any false or misleading statements, verbally or in writing, or refuses to provide requested information to an authorized officer, commits an offence and is liable on summary conviction to a fine of $400,000 and imprisonment for six months.
Additionally, the Bill states that no person shall smoke in the following outdoor places— anywhere on the premises of and within five metres from the outside boundaries of any health care, educational or child care facility; any waiting area or queue in a public place, including but not limited to any public transport stop, bus stand or bus park; any park, playground or amusement park; any stadium, arena, or other kind of sport or performance space; any gazetted site of historic or national significance; any space for the commercial service of food or drink; or any other outdoor place prescribed by regulations.
The Bill also lists examples of indoor public places where smoking is now prohibited. These include Retail establishments, including stalls, stores, shops, and shopping malls; hotels and other places of lodging; Restaurants, bars, pubs, cafes, and other eating or drinking establishments, Gaming machine venues and casinos; Entertainment facilities including clubs, cinemas, concert halls, theatres, game arcades, pool and bingo halls.
Smoking, according to the Act, is also prohibited at any publicly-owned facility rented out for events and any other indoor premises accessible to the public and any indoor workplace.
Any person who smokes in any place where smoking is prohibited commits an offence and is liable on summary conviction to a fine of $10,000 for the first offence, and $20,000 for any second or subsequent offence.
Additionally, the Bill makes it clear that all cigarettes shall be sold in an intact package containing not less than twenty sticks or individual units per package. This brings an end to the sale of one or two cigarettes at regular outlets.
The Bill also states that no person shall go into any public place carrying any tobacco product, electronic delivery system, or component, in a tray, container or otherwise for the purpose of making sales or commercially displaying the product.
Furthermore, the Bill prohibits tobacco advertising, promotion, and sponsorship. In this regard, local night clubs would have to change for example, the manner in which they promote their hookah /smoking themed parties.
Should a corporation or other entity contravene any provision of the Act, it shall be deemed to have committed the offence and shall be held liable for all costs and fines associated with any enforcement or corrective action and for any term of imprisonment ordered.

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