2.1. Smokeless tobacco products
Do you agree with the problem definition?
Yes.
Which optionaddresses most effectively?
Lifting ban on snuss.
Do you have any additional specific comments?
All forms of smokeless tobacco, including „snuss“ should be freely available in all Member states. The EU and member states have less justification to control consumption of smokeless tobacco since it does not produce the significant negative externality – second hand smoking. Which is deemed to provide justification for most of the regulation controlling consumption of cigarettes and other tobacco products which produce smoke.
3.1. Consumer information
Do you agree with the problem definition?
No.
If not, please provide explanations
The health risks associated with smoking are known to the general public. The Commission should investigate the level of information that consumers and the general public already have about the risks of smoking. Member states should have the right to determine the need of information.
It is false to argue that pictorial warnings perform an informative function. Their role is to threaten and to repulse consumers. It is true that pictures are used in many cases to convey certain information; however in case of cigarettes pictorial signs do not provide any additional informational that is not possible to convey by written message. There are studies that show effectiveness of pictorial singles to discourage smoking. However democratic government should limit itself to informing consumers about health risks, but not engage into intimidation and persecution of consumers.
The Problem definition errs in assessing that disparity in labeling throughout the EU has the negative impact on the functioning of the internal market. Firstly, it is different tax regimes that requires strict control of trade and imposes costs for cross border trade. The fact that member states are allowed to require different markings on packages companies this does not impede cross border more than the requirement to have description of an item in language of a place of sale.
Regulation of water pipes should not come under this Directive since the tobacco directive should limit itself to regulation of tobacco products, and should not regulate any equipment that might be employed by consumers to smoke tobacco products. Tobacco products that might be smoked by pipes are labeled in accordance with this Directive.
In your view, which option addresses the problem most effectively?
No change.
Do you have any additional specific comments?
The consultation asks whether introduction of generic packaging can address the problem of consumer information more effectively.
Introduction of generic packaging will lead to less satisfaction for consumers and businesses alike.
Packaging of any product helps to choose a product. Tobacco manufacturers creates different packaging because consumers are in need of packaging, they are in need of differences in products to substantiate their choices. Packaging aids the consumer when choosing legally manufactured good from the counterfeit or smuggled good. It also helps to distinguish products of different price ranges and perceived quality.
After prohibition of advertising of tobacco products information about the product is available to consumers only through packaging and display at selling points. It is obvious that both producers and consumers need communication about the product. Therefore producers rely heavily on the remaining channels.
It would be naive to assume that consumers do not make choices about products they use. Generic packaging initiative assumes that consumers unconsciously react to stimulus provided by the design of the package. Second assumption is that package design does not provide any valuable information from the “scientific” point of view. However tobacco product as any consumer product brings satisfaction to consumers based on the image that the product is in the mind of the consumer. All the marketing actions are aimed at creating a certain image. And it is not for the third party, in that case the government, to regulate which information is valid to be used for the creation of this image. If this assumption would have been applied to other consumer products all the packaging should have been disqualified as not providing any valuable information to the consumer choice.
The Commission should not follow the path of limiting the information available to consumers, but should encourage the governments to foster consumer responsibility for their actions. The Commission should not promote punitive and restrictive approach to tobacco consumption, but instead encourage systems that reward healthy lifestyle and responsibility for one’s health. The governments have the power to create systems that either hide or expose incentives for responsible choices and behavior.
Consumer is responsible for one’s health. Redistributive system of health care provision reduces power of incentives for consumers to lead a healthy lifestyle. Current health care system does not discourage smoking since in majority cases smoking patients are treated equally to the non-smoking patients. In reality smoking person should bear a heavier burden: both financial and through non-preferential treatment in cases where resources are scarce i.e. like transplantation. Member states should encourage private health care insurance that would differentiate between smoking and non-smoking persons and provide financial incentives for non-smokers early in life through cheaper health insurance (e.g. lower insurance premiums). This mechanism would act as a prevention system, through natural cause and effect. Furthermore this system would be more just since it will reward people who take care about their health.
Prohibition of advertising and introduction of generic packaging does address the demand for tobacco products. For politicians of developing democracies like Lithuania new restrictive initiatives in the EU seem to be appealing and attractive alternative to smoking prevention programs. Building effective system of prevention that tackles demand for smoking especially among youth is not popular since it does not provide publicity and politicians cannot show the results in the four-year election period. Therefore solutions that focus on prohibition and punishment find supporters in new member states however discourages long term approach to demand for smoking.
Generic packaging inevitably would have some impact on consumer choices, though it is difficult to estimate it in advance.
Generic packaging would decrease competition in the tobacco market and would hurt the consumers. Producers would be denied the possibility to introduce new products and to promote novelties in the market. Generic packaging would freeze the market in would establish high threshold for the new products to enter the market.
Generic packaging would not diminish neither the wish of the consumer to have the information about the product, nor the stimulus of the producers to provide consumers with the information about their products. By outlawing one communication channel the governments encourage more active use of other channels. There is a plenty of space for a producers to avoid this regulation for example through producing double packaging with outer generic layer and inner layer with current brand names and logos.
Generic packaging would pose threat to other industries where role of packaging is the same as in the tobacco businesses. Politicians would be free to propose and introduce generic packaging into alcohol and other “unhealthy” food markets. Deficient argumentation that paves the way for generic packaging in cigarettes market provides risk to other business.
4. Reporting and registration of ingredients
Do you agree with the problem definition?
Yes.
In your view, which option addresses the problem most effectively?
No change.
5. Questions on the regulation of ingredients
Do you agree with the problem definition?
No.
If not, please provide explanations
Tobacco additives are necessary to manufacture certain types of cigarettes. Report of SCENIHIR did not find the scientific base to justify a ban on tobacco products’ additives.
In your view, which option addresses the problem most effectively?
No change.
Do you have any additional specific comments?
Restriction to use measures that increase pleasure of using cigarettes should be separated from the ingredients that increase addictiveness. There must be a scientific prove about the public health benefits in banning the tobacco products‘ additives.
Common list of tobacco ingredients should not be established especially based on the features of toxicity, attractiveness, the addictiveness.
Toxic effect and addictive effect can be scientifically measured and assessed. However there should be caution in regulating ingredients that do not have scientifically proven heath risk, however increase attractiveness of cigarettes. Attractiveness is a subjective value of the consumer involved and cannot be scientifically measured by the third party. If attractiveness was a scientific fact and chemical substances that increase attractiveness were established business would use it. There would be little incentives to invest in marketing. Since attractiveness is a subjective valuation by the consumer, there can by no scientific prove and therefore no ban. There are many measures that try to increase attractiveness of tobacco products.
Ban on additives would effectively eliminate „American blend“ cigarettes from the European market.
6. Access to tobacco products
Do you agree with the problem definition?
No.
If not, please provide explanations
The problem definition does not cover the situation in some member states which have a significant part of tobacco market in the shadow economy. The aim of taxation policy is to reduce access to tobacco markets for the general population and especially younger consumers. However results of increased taxation depend greatly on the particular situation of the consumers and market in member states. Volume of the illegal market in tobacco products undermines success of other measures that are introduced to legal market participants.
The efficiency of excise duties will be higher, if consumers are 1) more sensitive to price, (i.e. more inclined to reduce consumption, after the prices are increased), 2) tend to opt for cheaper cigarettes less; 3) the smaller are the price differences between neighbouring countries and the harder it is to import cheaper cigarettes, 4) the harder the illegal products are available and the less are consumers tend to use illegal products (i.e. the less favourable attitudes of consumers to illegal products).
Lithuania has increased excise duties for cigarettes from 2003 to 2010. During the period of 2007 – 2009, excise duty on cigarettes was raised for a further four times. In 2009, excise duty on cigarettes was raised twice. The first increase took effect in March, and then the specific rate increased to 95 litas. The second increase took effect in September; a specific rate was raised to 132 litas, ad valorem to 25 percent. Currently, Lithuania meets the EU’s minimum of EUR 64 per 1,000 cigarette excise tax, but the excise tax will have to be increased to meet the minimum requirements of the EU in 2018.
There are certain features of Lithuanian economy that made it more vulnerable to shadow market in cigarettes. Lithuania has a significant scale of shadow economy – in 2010 it amounted to 27 percent of GDP.
Corruption is a wide problem in Lithuania. Lithuania does not manage to curb it according to Transparency international Corruption perception rating. Corruption and illegal trade are interconnected since high profitability of cigarettes smuggling give funds for smugglers to pay bribes. Later on lack of transparency decreases entrepreneurial risks for smugglers since the public officers are more vulnerable.
Lithuanian public is quite positive to smuggling. More than half of respondents (60 percent) fully justified, or were inclined to justify the smuggling and illegal consumption of goods, while the remaining respondents either fully condemned, or were tend to be dissatisfied with smuggling (30 percent)or had no opinion in this regard(10 percent).It should be noted that there were twice more of those who fully justify smuggling and consumption of illegal goods compared to those fully opposing to it.
Share of illegal market in cigarettes has been changing in the last decade. It has been linked to the excise increases. In 2002-2010, the change in total consumption was much less pronounced than the change of legal use.If during the period of 2002-2004, the legal consumer market fell from 5.9 billion cigarettes to 3 billion (as much as 49 percent), then from 2004 to 2008 it rose to 5.8 billion (93 percent).The year 2009 saw a significant 28 percent fall in legal cigarette sales.
According to the data of 2010, the share of cigarette consumers, which were found to have cigarettes with the health warning message in non-Lithuanian language, grew by 44 percent. Cigarettes with a warning message in the Russian language were found at 41 percent of smokers.
This situation does not give enough support for introduction of other measures to limit access to tobacco products. Since consumers are exposed to illegal market where there is no age control and no control of product quality. Additional costs on the legal market make it more difficult for the producers and retailers to compete with illegal entrepreneurs. Therefore it is vital to abstain from measures that would impute costs and limit access to purchasing legal products.
EU wide measures to limit access will have opposite effects on the national tobacco market, which will be detriment to health policy goals, consumer willingness to buy legal products. In the current situation EU should consider changing its approach to harmonisation of the excise duties on tobacco products, since economic downturn decreased consumer purchasing power and ability to buy legal products.
In your view, which option addresses the problem most effectively?
No change.
