Tobacco Control in Bulgaria World Bank presentation

Burden of Tobacco Deaths Shifting World: Annual Tobacco deaths (in millions) 2000 2030 Developed 2 ~3 Developing ~2 ~7 World Total 4 ~10 1 in 2 of long-term smokers killed by their addiction 1/2 of deaths in middle age (35-69) Since 1950, tobacco has killed more than 60 million people in developed countries Tobacco killed 4 million people worldwide last year about 7% of all deaths. By about 2025, tobacco will be responsible for ten million deaths per year, and 70% of these deaths will happen in the developing world, and 30% - 3 million- in developed countries. By then, tobacco will cause almost 11% of all deaths in the developing world, and 17.7% of all deaths in developed countries. Half a billion people now alive will be killed by tobacco products, and half of the deaths will happen prematurely.

Although cigarette consumption in developed countries started to decline, similar to other developing countries cigarette consumption continues to increase in Bulgaria – by 56 percent, from 12.2 billion pieces to 19 billion pieces between 1990 and 1999.

Bulgaria has one of the highest rates of smoking in Europe, and it is rising. Annual cigarette consumption per person rose from 95 packs in 1995 to 115 packs in 1999. The percent of individuals age 15 years and over who smoke increased from 33 percent in 1989 to 38 percent in 1994[1]. Revised figures for 1995 show that smoking prevalence among men age 15 years and over is 50 percent. The prevalence of smoking among men has remained roughly constant in recent years, but among women it increased from 17 percent in 1989 to 25 percent in 1995. A recent nationwide survey in Bulgaria[1] shows smoking patterns by age group: 58 percent of men and 39 percent of women aged 30-39 smoke, while only 5 percent of men over 70 and almost no women in this age group smoke. Smoking rates vary little by education or income, but are higher in Sofia and, among women, in other cities and towns. [1] Patterns of smoking in Bulgaria by Dina Blabanova, Source: patterns of smoking in Bulgaria, 1997Martin Bobak, Martin McKee [1] Bulgaria Ministry of Health and the foundation “Fight with Cancer” estimates.

Which interventions are effective? Measures to reduce demand Higher cigarette taxes Non-price measures: consumer information, research, cigarette advertising and promotion bans, warning labels and restrictions on public smoking Increased access to nicotine replacement (NRT) and other cessation therapies

Why increase tobacco taxes Good for public health Improve health outcomes Change smoking behavior Youth and the poor are more sensitive Increase budget share for other goods and services Good for economy Generate revenues Won’t necessarily reduce employment Won’t necessarily increase smuggling Since policy makers are the final decision makers on tobacco control policy legislation, and increasing tobacco taxes would affect consumers, government revenues, possibly smuggling, and the industry, it has to be evaluated from a broader perspective. A very large volume of evidence from many many countries shows that both public health and economies can benefit from increasing tobacco taxes. I will summarize why increasing tobacco taxes is good for the economy, and discuss the economic concerns associated with tobacco tax increases. First I will briefly discuss why tobacco taxes are good for public health.

Tobacco Taxes- Important source of revenue! As you can see from this graph, tobacco taxes are a significant share of total government tax revenue in most ECA countries.

Studies on the employment effects of dramatically reduced or eliminated tobacco consumption Type of Country Name and year Net change as % of employment in base year Net Exporters US (1993) 0% UK (1990) 0.5% Zimbabwe (1980) -12.4% Balanced Tobacco Economies South Africa (1995) 0.4% Scotland (1989) 0.3% Net Importers Bangladesh (1994) 18.7% If tobacco consumption falls, there may indeed be some job losses, among farmers, people who work in cigarette factories, advertisers, and people who specialize in distributing and selling tobacco products. But the money that used to be spent on cigarettes does NOT disappear from the economy. When people cut back their smoking or quit, they spend the money they save on other things – they eat out more (or just eat more), they join a health club, buy a bicycle, pay school fees or buy shoes for their children, and so on. This generates new jobs in other sectors. And in countries where this expenditure switching has been carefully studied, more often than not, there are more new jobs created than there are jobs lost. The more a country imports tobacco products, and the more labor-intensive (relative to tobacco product production) are the things that tobacco money is spent on instead, the more likely that a fall in tobacco consumption will INCREASE total employment. Of course, there are winners and losers. Some people will lose jobs and income, others will gain, and I don’t want to pretend that this isnt a major concern. But it is not something unique to tobacco – we have to deal with changes in consumption patterns and other economic adjustments all the time. Source:Buck and others, 1995; Irvine and Sims, 1997; McNicoll and Boyle 1992, van der Merwe and others, background paper; Warner and others 1996

The level of tobacco taxes in Bulgaria The level of the share of tobacco taxes – 55% total tax share and 37% of excise tax share- in retail price of cigarettes are on average in Bulgaria compared to other ECA countries but much lower than the EU countries.

Global (European) Evidence: Total and Excise Tobacco Taxes as % of Retail Price 2000 Some of the Central Asia countries are in a process of joining to the EU. One of the conditionality for the accession is to harmonize the cigarette tax level –excise and total- with the EU rates. Total cigarette taxes in EU countries range between 69% to 82% of the retail sale price of cigarettes. The excise tax share ranges between 55% to 66% of the retail sale price of cigarettes. Total tobacco tax= Excise+VAT, Excise = (Specific+Ad Valorem)

Low cigarette prices in Bulgaria But the average cigarette price in Bulgaria is one of the lowest in the region.

Compared with other consumer products in Bulgaria, a pack of cigarette is not expensive. In 2000, 500 grams of apples cost 50% more than a pack of cigarettes, while 500 grams of pork (just more than a pound) cost more than 5 times as much as a pack of cigarettes. So even if the price of a pack of cigarettes were to double or triple, it would still be low relative to food prices.

The percentage of wages and salaries spent on tobacco products is surprisingly large for all income groups, and higher at 5% for low-income households than for high-income households, who spend 3% of wages and salaries on tobacco. The pattern remains the same if one considers expenditures on tobacco as a percentage of all income (earned income as well as transfers etc), and if expenditures are calculated per capita rather than per household (to control for differences in household size). The 1997 Bulgarian data show that the highest income group spent more than twice as much per capita on tobacco (Lev 17,698) as the lowest-income group (Lev 7,652), but poorer households spent two thirds more of their gross income on tobacco (1.8 percent) as high-income households (1.1 percent).[1]   [1] The Bulgarian household sample included data on household income. The sample was partitioned into 3 income groups, with the poorest 40% in the low-income group, the next 30% categorized as middle-income and the top 30% as high-income households.

Deaths in developing regions CMP Injuries 18% 11% Injuries 13% NCD NCD 47% CMP 69% 42% 1990 2020 By 2020 developing countries will have a disease profile similar to that in 1990 in developed countries Deaths in developed regions countries towards non communicable diseases. In 1990 non communicable diseases caused 47% of the burden in developing countries. This is changing dramatically and by 2020, non communicable diseases will be responsible for the 68% of the burden in developing countries. CMP - communicable, maternal and perinatal diseases NCD - non communicable diseases Injuries NCD Injuries 7% 89% 8% NCD CMP 86% 4% CMP 6% Source: Murray and Lopez, 1996 1990 2020

The impact of the tobacco epidemic on health is alarming and rising. Smoking already takes a large toll in Bulgaria in lost lives, medical costs, and foregone earnings. Tobacco attributable deaths have increased rapidly. In 1995 smoking caused 32 percent of all deaths – up from 27 percent in 1975. Given the lag time between smoking and death, this percentage will continue to increase. The incidence of smoking-related diseases in Bulgaria is still relatively low by international standards because smoking became widespread fairly recently. But Bulgarians have became heavy smokers and this constitutes a disease and mortality time-bomb for the future. In 1995 smoking caused an estimated 32 percent of all male deaths age 35-69 and about 2 percent of female deaths in this age group. Smoking-related deaths are increasing: between 1975 and 1995, death rates for cancer attributed to smoking rose from 41 percent to 48 percent and for cardiovascular pulmonary disease (COPD) from 72 percent to 77 percent[1]. [1] Richard Peto, Alan Lopez, et al., “Mortality from smoking in developed countries 1950-2000: Indirect estimates from national vital statistics”, Oxford medical publications, 1994

Male Lung Cancer Mortality in Selected ECA Countries Age standardized rate/100,000 Tobacco is responsible more than 96% of lung cancer deaths. In ECA region, lung cancer mortality among men has been increasing and predicted to be increasing in the future, in Bulgaria, Former Yugoslavia, Romania, and Hungary. Given the high prevalence and level of smoking, this is not surprising. Source: International Agency for Research on Cancer

Bulgaria Lung Cancer-Males Lung cancer due to tobacco use has been increasing in Bulgaria. The cancer rate will keep increasing among today’s smokers in year 2013, if the current smoking pattern insist. Source: International Agency for Research on Cancer

Key World Bank Advice to Governments to Control Tobacco Use Price and taxation increases Ban all advertising and promotion (indirect and direct) Restrict smoking in public and work places Disseminate information on health risks that is understood Fund analytic research on causes, consequences and costs of tobacco use Support tobacco or health units