Anti-tobacco bill to stub out consumers
Russia’s Health Ministry and Social Development Ministry have jointly introduced an anti-tobacco bill for discussion which will see tobacco excises rise 470%, and make the excise component of the price consumers pay for cigarettes more than 50%. The move will see the minimum price for a packet of cigarettes jumping from the current 17 roubles to as much 60 roubles.
Russia’s cigarette tobacco companies are bracing for the hit. About 56% of Russian men and 16% women smoke, with 22% of them smoking at least 1 packet daily, according to the Russian Public Opinion Research Centre. Kommersant reports that the average outlay of about 500 roubles per month could climb to nearly 2000, or 10% of an average Russian salary, if the law goes ahead.
While the intention of the bill is to restrict Russian smokers with higher price and push them to quit smoking, with an attendant long term reduction in outlays for smoking related illnesses, experts say that the move could spur illegal tobacco businesses. Vyatcheslav Bobkov, head of the All – Russian centre for life quality told Kommersant that people reducing outlays on other consumer items was also likely.
“Inelasticity of demand for tobacco products can be described as one of the distinguishing features of Russia’s consumer behavior, that’s why normal households reaction to a price rise could prove not to work.”
The bill also proposes legislation to ban smoking in public places such as restaurants and night clubs, hotels, and airports, with a TV advertising ban also proposed.
The bill also proposes limiting the sale of cigarettes to larger stores, exceeding 50 square metres. This will lead to major changes in tobacco retailing with currently about 40 – 45% of sales through smaller outlets, with just 25 – 30% – from big retail chains.
Sergey Smirnov, director of the Institute for social policy at the New Economic School added that tobacco smuggling and underground cigarette production could also become issues.
“The talk isn’t just of an illegal imports of cigarettes from China, but also of appearing of illegal micro plants, with products non-compliant with any standards. ”