What now? Lived happily ever after?
Cigarette prices have seen unprecedented and dramatic price increase in recent times. Hoarding a stock of cigarettes would have been the best investment in last month ; it would have been the investment with best returns in recent times with about 40% returns in couple of months.
Now SL would probably be the country with highest Cigarette prices in real terms. UK has one of the highest Cigarettes prices in the world. Compared to UK (1800 per pack) our price (1000 Rs) when perchasing power parity , per capita income is factored in , is 41500/10600 x1000= Rs 3900. That’s more than twice the real term price of Cigarettes in UK . on the other end of the extreme in Nigeria, a pack is 150 Rs (300 naira ), period. In Pakistan a country in the region a pack is , yes original John Player gold leaf is just 182 rupees ,that’s less than the cost of 4 Cigarettes here. And in India on the other side of Palk Strait the prices are about half of our prices, the gold flake that I smoked when I was in India is 250 Indian Rupees now.
I made a thorough search but couldn’t find a single country that has higher price for Cigarettes s compared to Srilanka in real terms, that’s after per capita income is taken into the calculation.
So assuming my search is complete and didn’t miss some freak country that has higher Cigarettes prices let us see the possible results of this sharp price hike that probably has brought us to the no 1 spot in at least one aspect , Cigarettes prices , if we do not already have that dubious honor in suicide rate in the world. No just checked, South Korea and Guyana are above us, we are third with one decimal point below South Korea.
Going back to the effects and results of this price hike, what would be the likely outcomes of this move?
• There will be sharp reduction in smoking – being an ex smoker I don’t think that will happen . Whilst smokers who can afford will continue to smoke the same brand that they are used to the smokers who can ill afford their regular brand will go one brand down to a brand that will cost them equal to their previous brand prior to the price hike. Since there are many substitute products as they say in economics there is no compulsion to give up smoking here. I was told by a shop keeper that a gentleman who used to buy five gold Cigarettes on the way home after work now buys two gold leafs and five beedis, probably more puffs , same dose of nicotine and more carbon too.
• Cigarette making becoming a cottage industry- there is a distinct possibility for this upshot. Imagine you can buy the raw material for a Cigarette for 5 Rs, and wrap a even callous Cigarette with a Cigarette maker and sell it for 25 Rs. You just sell 100 Cigarettes among your neighbors or friends you make 2000 Rs , a days wage in half an hour, especially in rural areas.
• Less people will take up smoking because the prices are higher- I don’t think because youth who want to experiment, high price would not be a factor to discourage , but teaching at the schools of the consequences of smoking at least two periods a week before children take up smoking will have a much stronger effect on children to keep away from smoking
• Contraband Cigarettes smuggling- this is a big business everywhere. It has been estimated that in Europe alone 9 Billion Euros worth of contraband Cigarettes have been imported by smugglers in 2014 alone. And also it has been found that many fundamentalist groups use Cigarettes smuggling to raise funds for their activities. But I am not sure the price difference on the either side of the Palk Strait divide , double the price , would be sufficient to lure smugglers into contraband Cigarettes. However if Pakistan was close like India to us the price difference would surely be a tailor made situation for smuggling.
So is this extreme price hike would be helpful in curbing smoking ? not much . but it will be most useful in raising revenues for the government at the cost of pushing down people into poor quality substitutes. I recently, about two years back, quit smoking by using nicotine patches . Since then I have helped three friends quit smoking by introducing them to patches. But a set of patches is about 5000 Rs and also they are not available in Srilanka. Many friends, having seen my achievement ask me where to buy the patches.
So if government is genuinely interested in preventing people from smoking what they should do is to make available nicotine patches at reasonable price and also introduce this as a prevention care at village level, using so many government servants doing nothing in the villages to visit smokers at home and work places ; 4.5 field officials in each GS division to achieve this.