Statement of Inadmissibility of the Tobacco Industry Pressure on the Government of Ukraine

The NGO «Life», together with its partners, attests to the strong support of the Government of Ukraine in preventing pressure on the tobacco industry by the Government of Ukraine, acting solely in the interest of public health.

Article 10 of the Law of Ukraine №2899-IV «On Measures to Prevent and Reduce the Use of Tobacco Products and Their Harmful Impact on the Health» (hereinafter – 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 is 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, to provide financial assistance, financial guarantees, dotations, subsidies, preferential loans to the relevant entities at the expense of the State Budget of Ukraine and local budgets». Law of Ukraine №2899 protects the Government from any requirements of the tobacco industry for granting financial and other preferences.

In addition, Article 4 of the Law of Ukraine №2899 emphasizes «the priority of health policy in comparison with the financial, tax and corporate interests of economic entities whose activities are related to the tobacco industry».

The WHO Framework Convention on Tobacco Control (hereinafter – the FCTC), ratified by Ukraine by Law №3534-IV, provides a mechanism for the Government to prevent the tobacco industry from interfering in policy making. The Guidelines Recommendations for the Implementation of Article 5.3 of the FCTC set out the Parties’ algorithm for the protection against pressure and threats of the tobacco industry:

«Establish measures to limit interactions with the tobacco industry and ensure the transparency of those interactions that occur».
«Reject partnerships and non-binding or non-enforceable agreements with the tobacco industry».
«Do not give preferential treatment to 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 Government of Ukraine’s previous experience in communicating with the tobacco industry, including Philip Morris in 2018, ended with the signing of a «peace agreement» that directly contradicts the national interests and obligations of Ukraine in the implementation of the FCTC. The tobacco company’s blackmail and pressure led to a loss of UAH 635 million in tax liabilities that the Philip Morris Company failed to pay.

Threats that come to the media from tobacco companies of termination of work in Ukraine are manipulative blackmail, 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 essence of forestalling is 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. the introduction of an effective mechanism for counteraction of forestalling that will reduce the risk of excise duty underfunding and prevent pressure on the Government;

2. add inflation indexation to the planned 20% increase in excise duties on tobacco products in 2020, with the aim of securing the planned revenues of the State Budget next year and ensuring the implementation of the minimum specific excise duty on cigarettes by the European integration plan of Ukraine – 90 EUR for 1,000 pcs. in 2025;

3. Conducting consultations with relevant experts from the Ministry of Health and NGOs, who advocate for the interests of people in protecting against the health damage caused by smoking-related illnesses, to formulate a balanced and effective decision to regulate tobacco in Ukraine.

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