Economics of Tobacco for Turkey. Cigarette Consumption in Turkey,

Transcription

1 Economics of Tobacco for Turkey Cigarette Consumption in Turkey?? Cigarette consumption has been increasing in Turkey since 197s regardless of the economic crises, high inflation rate and reducing purchasing power of the population. During 197-2, cigarette consumption in Turkey increased by 27%, from 37,56 million pieces in 197 to 115,5 million pieces in 2. During the same period, per capita cigarette consumption also increased by 34% from 9 packs in 197 to 121 packs in 2. Cigarette Consumption in Turkey, Overall Cigarette Consumption (Million Pieces) Cigarette Consumption Per 15+ (packs) Overall Cigarette Consumption Cigarette Consumption Per 15+ Source: USDA?? During , Turkey had the second highest growth rate in cigarette consumption in the world, only behind Pakistan. During this period consumption increased by 52% in Turkey. Consumption (Million Pieces) % change Pakistan 31, % Turkey 73, % Indonesia 14, % Netherlands 23, % Romania 32,1 4 25% Argentina 34, % Chile 1, % Algeria 18, % India 82, % Taiwan 34, %

2 Egypt 4, % Austria 13, % Morocco 14, % Bangladesh 14, % Spain 82, % Source: USDA , World Cigarette Consumption Data?? In 1999, Turkey consumed 15% of total cigarettes smoked in the European and Central Asia (ECA) region. Total consumption in ECA was 757,151 million pieces, which was 15% of global cigarette consumption in that year. Overall, Turkey accounted for 2.2% of total world cigarette consumption in Percentage Shares of Turkish Cigarettes Consumption in ECA and ECA in the World, 1999 Rest of World: 85% ECA: 15% Rest of ECA: 85% Turkey, 15% of ECA Source: USDA, Estimation by World Bank staff. Note: ECA includes Albania, Armenia, Azerbaijan, Belarus, Bosnia & Herz., Bulgaria, Croatia, Cyprus, Czech Rep., Estonia, Georgia, Hungary, Kazakhstan, Kyrgyz Rep., Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Tajikistan, Turkey, Ukraine and Uzbekistan. Smoking Prevalence by Gender and Age in Turkey?? Smoking is quite popular in Turkey for both males and females. In 1997, around 51.5% to 65% (depends on different survey results) adult males and 38% to 49% (depends on different survey results) adult females in Turkey were smokers. During , the prevalence rate for both adult males and adult females increased. There were several small-scale youth surveys in Turkey during the 199s. In 1992 nationally representative survey revealed that 2% of high school students (15 to 17 years old) were daily smokers. According to a survey in 1996, smoking prevalence rate for boys aged 7-13 years old was 13.9% and for girls 9.1 (Emri S. 1998). A 1993 survey in Antalya province show that more than half of Turkish male physicians were smokers (Dedeoglu N, 1993). The percentage was slightly lower for their female counterparts.

3 Smoking Prevalence by Age and Profession in Turkey 6% 5% 4% 3% 2% 1% % 51% 52.9% 49% Males 41% Females 13.9% 9.1% Adults (15+), 1997 Youth (7-13), 1996 Physicians, 1993 Sources: Adult Data, Turkish Tobacco Institute, Youth data, Salih Emri, Ever cigarette smoking in Ankara, Tobacco Control, 7, , physician data, Dedeoglu N. 1993, Turkish Journal of Smoking and Health, 1, Male Female Total % of Number of % of Number of % total males Smokers females smokers population Number of smokers million million Million Source: Market file/un/national Statistics Year Daily smoking prevalence Sample size A national representative survey of high % school students A representative survey of high school and secondary school students in Ankara Grade 11 students % 2428 Grade 8 students % 935 A representative survey of apprentices in Males Elazig (city in South East of Turkey) Age 12 or less % Age % Age % Age % Prevalence rate for age % boys, 9% girls Source: World Bank tobacco survey

4 Tobacco Taxes?? In 1999, total tax incidence (percentage of taxes in the retail price) was 77% for the most popular domestic cigarettes and 85% for imported brands. Tax incidence in Turkey is actually the highest among selected ECA countries. Cigarette Price and Taxes as % of Retail Prices for Selected ECA Countries, 1999 Retail Prices (US$/pack) Tax as % of Retail Price 39% 36% 29% 49% 46% 55% 21% Lithuania Belarus Kazakhstan Latvia Ukraine Bulgaria Sources: IMF and The World Bank Estimates 67% 64% 63% 61% 61% 55% 77% 54% Russia Hungary Estonia Turkey Romania Poland Croatia Cyprus Slovenia Czech 6% Type of Tax Tobacco Fund: Domestic Cigarettes Tobacco Fund: Imported Cigarettes Defense industry fund Additional tax Education fund Grazing ground fund Veterans fund Value Added Tax Amount of Tax 3 US$/Kg*.4 US$/Pack 1% on factory price 12% on factory price 15% on retail price 2% on retail price 2% on retail price 17% on retail price Source: TEKEL Records Note: For cigarettes, 1 kg is assumed to be 5 packs, or 1 pieces.

5 Tobacco is an important source of tax revenue in Turkey. In 1999, total cigarette tax was estimated to be about US$4.4 billion, accounting for nearly 11% of total government tax revenue, the highest in ECA countries. Total Cigarette Tax (Million US$) Cigarette Tax Revenue and Its Percentage of Total Government Tax Revenue for Selected ECA Countries, % Lithuania Latvia Cigarette Tax as % of Total Government Tax Revenue 3% 4% 3% Estonia Cyprus Belarus Sources: The World Bank Estimates Cigarette Prices 3% 9% 2% 9% Kazakhstan Slovenia Bulgaria Croatia 5% 3% 6% 11% 1% Hungary Czech Ukraine Romania 5% Russia Poland Turkey 7% 11%?? In Turkey, cigarette prices have been raised constantly to reflect the rising inflation. After 1995, the real retail price has been relatively stable. In general, foreign brands are much more expensive than domestic brands. The increase in real price in 2 is due to government efforts to raise tax revenues following the 1999 Turkish earthquake.

6 Nominal and Real Cigarette Prices in Turkey, Nominal Price ( TL/pack) Real Price ( 1995 TL/pack) Nominal Price, Foreign Brands Real Price, Foreign Brands Nominal Price, Domestic Brands Real Price, Domestic Brands Sources: USDA, The World Bank The Burden of Tobacco Attributable Mortality and Morbidity? Cigarette smoking is the major cause of lung cancer. Globally, 17 percent of all cancer deaths (26% among males and 9 % among females) are attributed to lung cancer in 199s.? 82.8 percent to 83.1 percent of deaths from lung cancer is attributed to cigarette smoking in 199 and 1995 respectively.? Globally, smoking attributed deaths for vascular disease has been increasing more than that of smoking attributed deaths for lung cancer and COPD combined during ? The highest increase in percentage of smoking attributed deaths is observed in vascular disease category (12.86 %) compared to lung cancer (1.13 %) and COPD (7.16%) during ? Percentage of smoking attributed death for vascular disease is 11 percent worldwide in 1995.? Cardiovascular disease, in particular ischemic heart disease is the most common smoking related cause of death. On average, 16.6% of all causes of mortality is attributed to ischemic heart disease globally in 199s.

7 Population (total deaths) Lung Cancer Deaths Mortality Rate from Lung Cancer Per 1 Year Males Females Females Males Males Females Source: Death statistics in provincial and district centers, SISPMRT 1991: Death statistics in provincial and district centers, SISPMRT 1992, Death statistics in provincial and district centers, SISPMRT 1991, Census of population: Social and economic characteristics of population SISPMRT Census of population: Social and economic characteristics of population SISPMRT Tobacco control measures A stronger anti-tobacco law was enacted in 1996 (No. 427) in Turkey. Based on this law;?? Smoking is forbidden in: 1. Health, education related places, 2. Sports and cultural activities, 3. All types of public transportation vehicle, 4. Waiting rooms, 5. Places where at least five people are working.?? The law also banned the tobacco advertisement on radio and television, as well as in government buildings. However, it was permitted in print media. Indirect advertising (by using tobacco or tobacco products and their brand names) and any tobacco campaign that will promote and motivate the use of tobacco or tobacco products were banned.?? Restrictions to minors access to tobacco products was strengthened by increasing the minimum age to buy tobacco or tobacco products to eighteen years old.?? The following health warning must appear on all domestic and imported cigarette packets: "Tobacco is damaging to health". Products that do not have this note are not allowed to be sold or to be imported.?? Anti-tobacco messages: Turkish radio and television, and private television channels have to broadcast about the harmful effects of the use of tobacco and its products for at least 9 minutes per month.?? The Turkish Medical Association has been prominent in activities related to nonsmoking. A coordination Committee on Smoking has provided a forum for cooperation among different groups including the Ministry of Health and other relevant Ministries, the Turkish Medical Association, local authorities, the associations against smoking, and Turkish universities. A series of spot-

8 advertisements have been produced and diffused through the various national and private television channels. World No-Tobacco Day is celebrated annually in Turkey, usually with distribution of materials and involvement of the media. Production and Trade?? Turkey ranks 5 th in the world in tobacco production after China, India, USA and Brazil and produces around 4% of the world tobacco. In terms of oriental tobacco, which constitutes 1% of world tobacco production, Turkey is the biggest producer. About 65% of oriental tobacco are produced in Turkey; the rest are produced in Greece (25%), Bulgaria and Yugoslavia (1%). Tobacco Growing Area and Production in Turkey, Area (' ha) 4 Area Production Production ( ' Metric tons) Sources: Table A 2.1 Economics of Tobacco in Turkey (December 2), by Haluk Kasnakoglu and Erol H. Cakmak, Department of Economics, Middle East Technical University, Ankara, Turkey.?? In 2, Turkey produced 163,66 metric tons raw tobacco. Oriental tobacco production was 157, metric tons, accounting for 96% of the total. The remaining 4% were flue cured tobacco and burley tobacco. About half of the raw tobacco produced in Turkey were exported in 2. To control the overall supply, Turkey applied a quota system in 1994 where a producer can produce no more than 1-kg tobacco each year. Sharp drops of production in 1994 and 1998 are due to area quotas applied but removed or reduced in the following years.

9 Raw Tobacco Production and Exports in Turkey, Raw tobacco production (Metric tons) 3, 25, 2, 15, 1, 5, % 8% 6% 4% 2% % Raw tobacco production Percentage of exports in total production Source: USDA?? Overall Turkey is a net tobacco exporter. In 1999, Turkey exported US$56.8 million tobacco products (including raw tobacco and manufactured tobacco products) and imported US$ million, earning a net surplus of US$ million. Overall Tobacco Trade of Turkey, US$ Million Export Import Net Surplus / (Deficits) Source: SIS Trade Statistics?? Turkey exports oriental tobacco and imports blue cured and burley tobacco for domestic use. In 1997, tobacco leaves export earnings accounted for 2% of total merchandise exports in Turkey. However, since 1998, earnings from oriental tobacco have declined, due to bad economic conditions in the former Soviet

10 Union countries and anti-smoking campaigns in the US. Net surplus from raw tobacco trade was US$23 million in Raw Tobacco Trade in Turkey, Million US$ Raw tobacco exports Raw tobacco trade net surplus Raw tobacco imports Sources: FAO and SIS Trade Statistics?? In 2, Turkey produced 128 billion pieces of cigarettes. Cigarette production has been increasing very steadily since 199. Cigarette Production in Turkey, , 12, 1, 8, 6, 4, 2, Million Pieces Source: USDA?? Turkey did not export or import cigarettes until 198. Exports have started in 1981 and imports have started in 1984 and Turkey has become a net importer of cigarettes. In 199, trade deficits in cigarettes reached its peak of 289 million dollars. Starting in 1991, cigarette imports started to decrease sharply and fell to negligible levels in In 1999, Turkey is a net cigarette exporter with earnings from cigarette trade amounted to 68 million dollars.

11 Cigarette Trade of Turkey, US$ Million Export Import Net Surplus/(Deficits) Source: SIS Trade Statistics