NGO Advocacy Center “Life”, together with its partners, acting solely for the benefit of public health, attests its strong support of the Cabinet of Ministers of Ukraine in preventing tobacco industry’s pressure on the Government of Ukraine.
Article 10 of the Law of Ukraine No. 2899-IV “On Measures to Prevent and Reduce the Use of Tobacco Products and Their Harmful Impact on the Health of the Population” (hereinafter referred to as the Law of Ukraine 2899) clearly defines the requirements for carrying out activities related to production, wholesale and retail trade, export and import of tobacco products: “It shall be prohibited to support the production (importation) of tobacco and tobacco products for sale in the customs territory of Ukraine in the form of state financing, financial assistance, financial guarantees, subsidies, concessional credits (loans) to the business entities at the expense of the State Budget of Ukraine and local budgets”. The Law of Ukraine No. 2899 protects the Government from any requests of the tobacco industry for granting financial and other preferences.
In addition, Article 4 of the Law of Ukraine No. 2899 emphasizes “the priority of health policy in comparison with the financial, tax and corporate interests of business entities whose activities are related to the tobacco industry”.
WHO Framework Convention on Tobacco Control (hereinafter referred to as the FCTC) ratified by Ukraine through the Law 3534-IV provides for a mechanism for the Government to prevent the tobacco industry from interfering with policymaking. The Guidelines for the Implementation of Article 5.3 of the FCTC set out the algorithm to be used by the Parties to protect themselves against the pressure and threats of the tobacco industry:
Principle 3 of the Guidelines for the Implementation of Article 5.3 of the FCTC requires the tobacco industry to comply with the FCTC requirements: Parties should require the tobacco industry and those working to further its interests to operate and act in a manner that is accountable and transparent. The tobacco industry should be required to provide Parties with information for effective implementation of these guidelines.
The previous experience of the Government of Ukraine’s communication with the tobacco industry, in particular with Philip Morris in 2018, ended by signing a “peace agreement”, which directly contradicts the national interests and obligations of Ukraine in the FCTC implementation. The tobacco company’s blackmail and pressure led to the loss of UAH 635 million in tax liabilities that Philip Morris did not pay.
Threats from tobacco companies (reported by the media) to terminate work in Ukraine is a manipulative blackmailing, because in no country in the world, regardless of the level of regulation of the tobacco market, tobacco companies have voluntarily stopped selling tobacco products.
The possibility of withdrawing the purchase of excise duty stamps for tobacco products and the probable temporary cessation of tobacco production shows a gap in the regulation of the tobacco market. Tobacco companies use forestalling tactics when it benefits them. The forestalling means that tobacco corporations produce and store in their warehouses and the warehouses of distributor-monopolist Tedis Ukraine an excessive amount of tobacco products just before tax increases.
Therefore, the Government of Ukraine should continue to counter the manipulative pressure of tobacco corporations by:
1) Introducing an effective mechanism for forestalling counteraction, which will reduce the risks of excise duty shortages and prevent pressure on the Government;
2) Adding inflation indexation to the 20% increase of excise duties on tobacco products planned in 2020 in order to ensure the planned revenues of the State Budget next year and to ensure the implementation of the European integration plan for Ukraine to reach the minimum specific excise duty on cigarettes – 90 EUR per 1000 pcs. in 2025;
3) Holding consultations with the relevant experts from the Ministry of Health and NGOs that advocate for the interests of people in the protection against harm to health caused by smoking-related diseases in order to develop a balanced and effective decision on tobacco control in Ukraine.