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The Tax Stamp Forum is the only global Event to focus on the rapidly-growing and evolving field of excise stamp specification, production and implementation for alcohol and tobacco products.
May 2013 Highlights
The proceedings began with a comprehensive review by TMA President Farrell Delman, of the history of the tobacco business and its inherent ironies. The greatest of these is the fact that it is so often criticised on health grounds and yet yields handsome profits and indispensable tax revenue. As Warren Buffett said, ‘What other industry make a product for 1 cent, sells it for $1 and has such incredible brand loyalty?’
In 2009, the US cigarette market consisted of 315.8 billion pieces and yet in 1900, there were none. The cigarette emerged from a background of chewing, snorting and pipe smoking to become the multibillion industry it is today. And yet the cigarette is already in decline as a result of another irony, the millions of dollars the industry spends telling the public not to use its product.
Perhaps the greatest irony of all is the fact that although cigarette sales are in decline, the profit per pack has never been greater and stock investment in tobacco companies never rosier.
The main invited guest speaker was Dr Lawrence Deyton, the new appointee as head of the Center for Tobacco Products at the Food and Drug Administration (FDA). One of the first actions of the Obama administration was to bring tobacco under the auspices of the FDA in consideration of its effect on health. Dr Deyton has spent his first year in office listening to the concerns of the various stakeholders and building up his department from a staff of one to over 90. He is now ready to begin taking action - but what action?
The audience listened attentively to his address, in which he enunciated the four principles that would guide his activities:
- First is to reduce tobacco initiation by restricting promotion to children by eliminating tobacco sponsorship of concerts and sporting events.
- Second is to educate the public about the hazards of smoking and debunking the myth that descriptions such as ‘Light’ mean less harmful.
- Third will be the application of regulatory science, given the ‘low tar’ cigarettes are just as deleterious to health as regular cigarettes and so will require hard evidence that new alternatives are really safer.
- And fourth is open engagement with industry to implement the Family Smoking Prevention and Tobacco Control Act (PACT), signed into law last year.
The first question in the ensuing Q&A session concerned the less harmful smoke-free tobacco products which will be obliged to display wording from June, 2010 stating that they are NOT less harmful. Dr Deyton replied that he would simply be applying the law. The second question referred to the widely held view that the law was formulated to allow ‘big tobacco’ to eliminate its smaller competitors. In response, Dr Deyton doubted that this would happen but the polite audience had registered its caution.
The next topic to receive an exhaustive airing was the function and classification of these smokeless tobacco products.
At the heart of the issue is mounting evidence that the tar resulting from the combustion of tobacco is what causes health damage. This is not new but there is a growing number of smokeless alternatives deserving of adoption by those preferring safer habits rather than complete cessation – including snuff, snus, e-cigarettes, ‘zerostyle mints’, lozenges and patches.
An entire panel examined these products in detail. Much evidence was presented showing that these products were 99% safer than cigarettes, but the idea of switching smokers to safer alternatives was unacceptable to the anti-smoking lobby who currently have the political upper hand. They believe that cessation is the only alternative to smoking.
In spite of this, interest in these alternatives is increasing but their legal status remains unclear. The FDA has taken upon itself the responsibility for preventing importation of electronic cigarettes until their status is defined. The alternatives seem to be that they are either declared a drug delivery system in which case they will be banned, or they will be declared a tobacco product, in which case they will be taxed.
Medical practitioners pointed out the ‘Catch 22’ anomaly that the FDA requires scientific proof that such alternatives are safer then cigarettes, and yet this proof can only come through epidemiological studies through usage in wider populations. Such methodology is acceptable with medicines but seemingly not acceptable with tobacco products.
A concluding panel discussion on the illicit trade in tobacco products highlighted the lack of resources of the US Department of Justice for investigating the problem and the recent failure of the Framework Convention for Tobacco Control (FCTC).