| Come protest one of
the IMF's deadly lending requirements...
-
DEMONSTRATION AT IMF - The global Merchants of Death, a.k.a Philip Morris British American Tobacco, have a good friend in the International Monetary Fund. The IMF doesn't think twice about forcing low-income nations to sell their inefficient tobacco monopolies to multinational tobacco corporations that are true masters of killing for profit. On Monday, Essential Action will release a report detailing how IMF pushes policies that undermine public health and help Big Tobacco. Come to the demo and help us expose the IMF's pack of lies!
For further details about this issue see below. For more information about the demo, contact Anna White <[email protected]> or 202-387-8030 Read the report "Needless Harm": HTML, PDF ##### BACKGROUND INFORMATION The International Financial Institutions and Tobacco An estimated 4 million people will die worldwide from tobacco-related disease this year, according to the World Health Organization. By 2030, WHO projects 10 million will die from tobacco-related causes, with 70 percent of those deaths occurring in developing countries. There is overwhelming evidence, much of it from the United States but also from countries as diverse as Thailand, Poland and Norway, that sound tobacco control measures can significantly reduce cigarette consumption and save millions of lives. The World Bank has been a leader in recognizing the severe health consequences of smoking and, particularly, the economic costs to society of cigarette consumption. The Bank has done a good job in arguing for the economic benefits of public health measures to discourage smoking, and it will not make loans for tobacco-related projects. As a policy recommendation, the Bank has supported increased excise taxes on cigarettes -- a vital tool to discourage consumption -- and the Bank and the International Monetary Fund have supported cigarette tax increases as revenue earners. International Financial Institution Support for Policies that Undermine Tobacco Control and Public Health Objectives However, the Fund has supported privatization of tobacco-related enterprises, despite evidence that such measures increase the power of tobacco multinationals and increase cigarette consumption. And the Fund has also supported, through its adjustment lending and adjustment-related plans and strategies, reductions in tobacco tariffs and, in some cases, tobacco excise taxes -- again despite strong evidence, including from the Bank, that such measures are among the most important to discourage smoking. The Fund has pressed for privatization in, among other countries, Turkey, Thailand, South Korea and Moldova, in many cases despite strong opposition in the countries to these measures. The Fund has supported tariff or excise tax reductions in Uganda, among several other nations. Whatever the merits of privatization of other sectors of the economy, tobacco represents a unique case, and policies relating to tobacco must be guided above all by public health considerations. Selling off state-owned tobacco enterprises generally has the effect of transferring control of cigarette markets from state companies to the handful of tobacco multinationals (BAT, Japan Tobacco, Philip Morris and a couple more minor players) which are the almost certain acquirers. This transition harms public health, because state-owned tobacco enterprises are less aggressive market and political participants than the multinationals. The state companies tend to be less aggressive and innovative marketers of cigarettes, both in terms of advertising/promotion and in designing products that have broad and diverse appeal. They are less likely to attempt to influence, skirt or undermine domestic tobacco control regulations. The impact of privatization is suggested by the experience in opening of Asian markets to foreign imports. After misguided U.S. pressure forced open markets in Japan, Taiwan, South Korea and Thailand, smoking rates jumped. Tobacco liberalization led to aggregate increases in smoking rates of 10 percent, according to World Bank analyses. The effects are particularly serious among teens and women, who have lower smoking rates in many developing countries, and who the multinationals have expertise in inducing to smoke. In South Korea, according to the General Accounting Office, the smoking rate among teenage girls quintupled in a single year following the opening of the market to the multinational tobacco companies. The evidence on the impact of price on smoking rates is incontrovertible. Higher prices deter smoking; lower prices lead to higher smoking rates. In industrialized countries, cigarette price increases of 10 percent produce a 4 percent decline in cigarette consumption; in developing countries, evidence suggests the benefits may be twice as great. The main way governments control cigarette price is through taxation. The World Bank supports higher taxes on cigarettes but favors nondiscriminatory excise taxes over tariffs. Yet IMF adjustment packages and and adjustment-related plans and strategies have supported cuts in tariffs without correlative increases in excise taxes -- with the impact of decreasing prices -- as well as occasional cuts in excise taxes. These price cuts are sometimes justified on the grounds that high tariffs or taxes encourage smuggling, but this argument is not well supported. Tobacco smuggling is a serious problem -- it is estimated that as many as one third of all internationally traded cigarettes are smuggled -- but it is not due to tax differentials between countries. Only a small proportion of smuggled cigarettes are moved from a low-tax country to a high-tax neighbor; the norm is diversion of cigarettes while in transit and before any tax or tariff is paid at all. Moreover, there is emerging evidence suggesting some tobacco multinationals may be deeply involved in smuggling; and it is clear that both exporting and importing countries have effective measures available to them to prevent smuggling that leave taxes and tariffs in place. Appropriate Policies at the International Financial Institutions to Support Tobacco Control Given the life-and-death stakes in the case of tobacco, public health must be absolutely prioritized over countervailing considerations of ideology and generic policy preferences. The IMF and other international financial institutions should end all support for, or endorsement of, tobacco privatization, reductions in tobacco excise taxes and reductions in tobacco tariffs and duties (at very least without simultaneous, offsetting increases in excise taxes). Essential
Action |