Despite international tobacco companies increasing cigarette prices in the past few years, there has not been a significant decrease in cigarette sales, a study has found.
Researchers from Taipei Medical University and the University of Bath tracked cigarette prices from 2011 to 2016 and found that tobacco companies had adopted a “boiling the frog” tactic, increasing prices of a packet of cigarettes by NT$25 to NT$30 (US$0.81 to US$0.97), or 40 percent, in Taiwan over the five-year period.
However, cigarette sales only dropped by 1.7 percent in the same period, the study found.
The companies enriched themselves by hiking prices, while smokers did not cut down, continuing to harm their health, the study said.
In 2011, 1.88 billion packets of cigarettes were sold in Taiwan, while 1.85 billion were sold in 2016, the study found.
National Health Research Institutes researcher Wen Chi-pang (溫啟邦) yesterday said that international tobacco companies are astute in their pricing strategies, focusing price hikes on mid-to-high-range cigarettes.
People who are used to smoking cigarettes that cost more tend to be more loyal and do not switch products, so even with the price rises, they continued to smoke the same brand, Wen said.
People who smoke cheaper cigarettes are usually younger or are in a lower income bracket, so by not raising prices on those — or only raising them by a small amount — the companies retained those customers, he said.
This strategy contributed to revenue growth for tobacco companies, he said.
Wayne Gao (高志文), a doctor at Taipei Medical University, said that in 2017 the government started levying a tobacco tax of NT$20 on each packet, which drove annual sales down by 18 percent, or about 300 million, to about 1.4 billion packets.
Hailing the move as the “most successful preventive healthcare policy ever,” Gao said the move would bring significant long-term public health benefits — for example fewer cases of chronic obstructive pulmonary disease, cancer and cardiovascular diseases — which would allow the nation to reduce its healthcare budget.
The tobacco industry has yearly revenue of about US$500 billion, with Taiwan contributing at least NT$160 billion annually.
The WHO and the World Bank recommend up to a 75 percent tax on cigarettes, while Taiwan only levies 50 to 55 percent.
The government should increase the tobacco tax and position it as its flagship healthcare policy to combat cancer and chronic illnesses while reducing healthcare spending, Gao said.
The research was published in the international journal Tobacco Control.
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