Tobacco Documents Online

INFOTAB WORKSHOP GROUP DISCUSSIONS - WEDNESDAY SEPTEMBER 21 - Jacques LaRiviere Group_2___'_Industrv Strateqies_to_Combat Taxation" Ours was a very analytical and prospective group. We identified solutions to problems that don't really exist yet. But on a more serious note, we took snapshots of the various countries represented around the table to identify present effective tax rates, problems associated with telling the taxation story to government, and then got into a more detailed discussion of approaches to be used in discussions, be they continuing or specific on the matter of taxation with government. There was unanimity in the feeling that the development of the annual budget in developed countries, has taken on such proportions that it is perhaps foolhardy to believe that dealing with the Minister of Finance ori.lv is a proper strategy. The development of a budget is a cabinet undertaking and in developing a strategy one should bear in mind that the discussion should in fact be taking place with the government in its cabinet form. While there are few countries where tobacco taxation policy is explicitly identified as directly related to what we know as social costs, in other words where the Health Minister has direct input - with France perhaps being a recent exception to that rule - the feeling was that the dealings should take place with the government as a whole. The feeling was that the influence of the health lobby on finance ministers would be lesser in developing countries than it is in developed countries. On the subject of organising smokers who, as we all know, tend not to be a homogeneous constituency, particularly on the subject of taxation, is something worth looking into. There was a very strong feeling that we should, as a lobby group in our own countries, get to know the fiscal technocrats to find how much they know about our industry, how it works and about the impact of taxation, not just on the product but on the industry. In developing argumentation for presentation to cabinets, or to governments, we tried to establish an order of priority for the

2 argumentation. It was agreed that the uppermost argument should be "the goose is probably very well done in our country but for God's sake don't kill it because it is a major revenue producer". It behooves us to do our homework properly - to identify the point of diminishing returns for government, if they don't know. The second most important argument might well be the socio-economic impact of the industry: raising the political argument of excessive taxation creating unemployment, which tends to get a hearing. That argument can also be presented quite effectively by other members of the tobacco family, be they growers, trade unions, wholesalers or retailers. Great attention should be paid to elasticity of demand studies, theirs and ours. Find out how they structure theirs, so that if there is a discussion you know what assumptions they used. The regressive nature of tobacco taxation is an argument that can be used in some countries. And in identifying a spokesperson for the group in discussions with government, one should never overlook the political advantage of using a local company or a national company as opposed to having a spokesperson who is clearly identified with a multinational.