The global spread of coronavirus disease (COVID-19) is creating a havoc worldwide. The COVID-19 pandemic has swept across the world, infecting more than 4 million people and killing over a quarter of a million people to date. To contain the spread of deadly SARS-CoV-2,the virus that causes COVID-19, countries across the world have responded with lockdowns and economic shutdowns, to contain the virus spread. Nepal has been in over 7 weeks of lockdown. Nepal was the first South Asian country to clamp a stay-at-home order on 24th March while allowing movement of essential services. Like other countries, Nepal is having profound economic and social impacts, in addition to the direct impact of the virus on health and health systems. With the announcement of nationwide lockdown, almost all business, industries, service sectors have been closed, transportation has been suspended and imports of essential goods have been halted.
The pandemic is having a major impact on public finances – with the lockdown reducing economic activity and hitting tax revenues hard. Ahead of next month’s Budget it is therefore critical to consider options for protecting the tax base. One option is substantially raising cigarette taxes: this will both raise revenue and reduce tobacco use. The growing evidence that Covid-19 affects smokers more severely, creates a compelling case for increasing tobacco taxation in next month’s budget.
COVID-19 is found to affect smokers more since it attacks lungs, and smokers may already have lung disease or reduced lung function which would greatly increase risk of serious illness. Further, during the act of smoking, smokers tend to touch the contaminated cigarettes and lips increasing the possibility of transmission of virus from hand to mouth.Preliminary research suggests that lungs exposed to cigarette smokes accumulate abnormally large number of ACE2 receptors (it is an enzyme attached to outer surface of cells in the lungs which is the only entry point of Coronavirus) leading to higher susceptibility to COVID-19. Further, a study of 1099 COVID-19 patients in China, published in in the New England Journal of Medicine found 3 times higher risk of severity of illnesses when compared to never smokers. In the study, 12.4% of smokers required ICU admission or placed on a ventilator or died than only 4.7% of non-smokers. Further, another study among 78 COVID-19 patients of Wuhan District published in Chinese Medical Journal has shown that 27% of the patients with smoking history progressed to serious case than the 3% of stabilization group. And those who had history of smoking the probability of developing COVID-19 was 14 times higher than those without smoking history. A recent systematic review has also concluded that smoking is most likely associated with negative progression and adverse outcomes of COVID-19. The mounting evidence suggests that smokers face increased risk of developing severe complications and dying due to COVID-19 infection compared to non-smokers.
As the risk factors of COVID-19 severity are more frequent among smokers, reducing the prevalence of smoking should be of priority, especially among smokers with comorbidities. Cessation at any time represents a huge opportunity for public health, with smokers tending to lose at least ten years of life. Reducing smoking at this specific time, can help limit the impacts of COVID-19 as there is immediate and long-term health benefits after quitting. According to WHO, within 2-12 weeks of quitting, smoker’s circulation improves and lung function increases.
World Health Organization and a commentary analysis on “COVID-19 and Smoking” published by Oxford University press suggest to include importance of smoking cessation during the pandemic in the ongoing public health campaigns. Nevertheless, the role of smoking in the spread and exacerbation of corona virus has got little attention to date. Knowledge about host factors such as smoking, should be of importance in reducing viral contamination and the severity of the disease. As Nepal being a country with fragile health system having high smoking prevalence, particularly in certain groups of the population. Nepal Development Research Institute’s recent nationwide survey suggests up to 70% of labourers and illiterate men use tobacco suggesting, need of high attention on smoked tobacco use at this time of crisis.
According to WHO, tobacco taxes has proven to be the most effective individual measure to help reduce tobacco consumption, prevent future illness and save lives. Further, experiences from different countries have also shown that an increase in cigarette taxes is one of the most cost-effective ways in reducing cigarette use and enabling smokers to quit. In Nepal, the current tax on cigarette is significantly below the WHO recommendation of 70 percent of the retail price. Taxation was only was 27 percent in 2019 and is one of the lowest rates in Asia. The tax raised on cigarettes will also help government raise its revenue collection, avoid future health-care costs and ease the burden on health-care systems.
Moreover, tobacco tax has declined as a percentage of government revenue over the last decade. When we look at the trend of percentage of excise duty from tobacco tax then since 2009/10, the percentage has declined from 2.54% of total revenue to around 1.93% in 2017/18. The increase in tobacco excise duty has not kept pace with the increase in the rest of government revenue. This highlightneeds of increase in specific tax of cigarettes which would quite significantly increase revenue. In addition, at this crucial juncture, where there is quite significant revenue shortfall and negative consequences of tobacco use, WHO also suggests it is the best time to think about increasing tobacco taxes.
Government of Nepal’s revenue collection has fallen short quite significantly partly due to the shutdown. Amid the COVID-19 pandemic, following slump in economic activities government’s revenue collection has been badly affected. According to YagyaDhungel, joint secretary at the Finance Ministry, only Rs 600 billion has been collected against a target of Rs. 798 billion. According to Financial Controller General Office, the government has collected only Rs. 590.63 billion taxes against the target of 1.11 trillion. Though the information varies with different sources, both highlights that there is shortfall in government’s revenue collection from taxes. Further, the World Bank has warned South-Asian government to ramp up action to curb the health emergency which will have huge economic contractions. On top of that, Nepal’s growth is expected to decelerate to 2.8 percent in FY20 because of which government revenue is likely to take a major hit.
With the increasing lockdown days to contain the spread of virus, the impact on economy will be devastating. The increase in taxes can help to reduce prevalence of tobacco use, and therefore making people more resilient to COVID-19. It can also help to generate much needed revenue, at a time when the government is in need of revenue to fund the pressures on the healthcare system due to COVID-19 and to address the budget shortfall by the recession triggered by the pandemic. Therefore, increasing tobacco taxation is a win-win situation at this time of COVID-19 pandemic from revenuestandpoint and public health perspective.Nepal Cancer Relief Society and Nepal Development Research Institute are therefore urging the government to increase tobacco taxation at the forthcoming budget in May.
Research Associate/Program Manager for Tobacco Control Program
Nepal Development Research Institute
Pulchowk, Lalitpur
