NZ reverses policy against smoking; lessons for Lanka and more

Last year, New Zealand passed hitherto unheard legislation when it banned the sale of tobacco products to persons born after January 2009, in what it termed measures to ban smoking for future generations. The law was to come into effect from July next year. However, Kiwi officials noted last week the move would have “a significant impact on the Government books” at over one billion dollars annually, which it can ill afford…. Kiwi Prime Minister Christopher Luxon also stated “the reversal would prevent a hidden tobacco market cropping up and stop shops being targeted for crime.” The Premier stated his Government would continue to work on lowering smoking rates through education and other policies

By Patrick De Silva

The Kiwi Government last month scrapped laws to ban smoking for future generations. The move came as part of measures to boost revenue, plus, opposition from within its fold. Sri Lanka has in place some of the tightest tobacco control laws and price regimes in the world, following years of lobbying by vested groups from within and outside the country, citing movements in the developed world. But this latest measure from New Zealand, which is a highly-developed free-market economy would naturally tilt that thrust.

Last year, New Zealand passed hitherto unheard legislation when it banned the sale of tobacco products to persons born after January 2009, in what it termed measures to ban smoking for future generations. The law was to come into effect from July next year. However, Kiwi officials noted last week the move would have “a significant impact on the Government books” at over one billion dollars annually, which it can ill afford. Several coalition partners of the New Zealand Government had also voiced their opposition to the draconian legislation. As well as the age limit, the new law would have slashed the number of retailers able to sell tobacco products to a maximum of just 600 nationwide, a significant drop from the current figure of 6,000.

Kiwi Prime Minister Christopher Luxon also stated “the reversal would prevent a hidden tobacco market cropping up and stop shops being targeted for crime. Concentrating the distribution of cigarettes in one store in a small town is going to be a massive magnet for crime.” The Premier stated his Government would continue to work on lowering smoking rates through education and other policies.

Sri Lanka’s legal tobacco trade proffers over Rs. 120 billion in revenue to the Government annually, in addition to infusing over Rs. 33 billion to Sri Lanka’s GDP as per Oxford Economics Report of 2020. Education and pragmatic policy will pave the way for any effective change. A balanced approach always trumps draconian measures that will simply spawn a thriving underground

Sri Lanka has a lot to draw from this experience from a highly-developed free market. Sri Lankan cigarettes are amongst the most expensive fags in the world, and leads the world in terms of cost versus per capita earnings. This has spawned a thriving illicit market in the country, with over 900 million sticks making their way into the country annually, as per Customs, causing over Rs. 79 billion in losses to the Government in 2023 alone. In addition to smuggled cigarettes, high prices have compelled smokers to downgrade to products such as beedi, which are over ten-times cheaper than cigarettes and offer little or no returns to Government. Smoking incidence in Sri Lanka has hardly changed despite the draconian measures and this is due to the presence of a strong illicit market. This is what the New Zealand Prime Minister and his officials allude to with the reversal of the laws.

Sri Lanka has a lot to draw from this experience from a highly-developed free market. Sri Lankan cigarettes are amongst the most expensive fags in the world, and leads the world in terms of cost versus per capita earnings. This has spawned a thriving illicit market in the country, with over 900 million sticks making their way into the country annually, as per Customs, causing over Rs. 79 billion in losses to the Government in 2023 alone. In addition to smuggled cigarettes, high prices have compelled smokers to downgrade to products such as beedi, which are over ten-times cheaper than cigarettes and offer little or no returns to Government

The lack of availability or distribution also presents an outlet for smuggled and illicit products, as consumers will seek out underground channels. This was evidenced in Bhutan when in banned tobacco products in 2010, making way for a thriving black market hampering public health and revenue aspirations. As Sri Lanka already grapples with an annual loss of Rs. 75 billion due to smuggled products, any draconian measures could spell further gloom.

The Kiwi example amply demonstrates how Governments globally must not be swayed by the whims and notions of singular groups and ideologies, and the pendulum is swinging. Democracies should not dictate to the masses what is espoused in the minds of a few. Free-markets must stay open where consumers have the right to choose how they approach any legal product. Sri Lanka’s legal tobacco trade proffers over Rs. 120 billion in revenue to the Government annually, in addition to infusing over Rs. 33 billion to Sri Lanka’s GDP as per Oxford Economics Report of 2020. Education and pragmatic policy will pave the way for any effective change. A balanced approach always trumps draconian measures that will simply spawn a thriving underground.