New rules restricting fag sales rattle tobacco retailers

The Tobacco Retailers’ Association yesterday voiced opposition against the government’s intentions to ban the sale of cigarettes at outlets within 100 metres of schools and places of religious worship, since such a move would drive most eateries and shops out of business.

“Our members have said that they would lose 50 percent of their sales if the government goes ahead with this decision,” Tobacco Retailers’ Association Secretary Nilantha Costa said at a media briefing held in Colombo yesterday. He said that  the fall in revenue would not come from the shops not being able to sell cigarettes, since the shops now gain a margin of 2 percent on a cigarette, compared to 15 percent previously, owing to the tax increases, which came into effect late 2016.

“It’s not the revenue we get from selling cigarettes. When a customer usually comes to our shops for tea or to have a meal, they prefer to have a cigarette as well. If we can’t sell cigarettes, these customers would stop frequenting such eateries or shops and we can’t sell our other products,” Costa said.

He claimed that of the 7,500 eateries, tea shops, supermarkets and grocery stores of varying sizes, which are members of the association, over 95 percent are situated within 100 metres from schools and places of religious worship. Nationally, tobacco retailers total 125,000 he said.

Costa guaranteed that the members of the Tobacco Retailers’ Association do not sell cigarettes to minors or allow cigarettes to be smoked within a shop, as prohibited by law.

“We would know if we are inducing the minors to smoke because then the public health inspectors would catch us and close down our shops. We also have children so we wouldn’t sell to other children. If schoolchildren want to buy cigarettes, they won’t come to our shops. They will go to shops farther away, which would sell to them,” Costa said.

He said that if the government wants to drive down the consumption of tobacco among minors, they would go after such errant retailers and those selling smuggled cigarettes and beedi.

Meanwhile, Tobacco Retailers’ Association Deputy Secretary Jagath Hennayake added that the government also aims to limit cigarette sales to purchase of an entire packet, instead of the current practice, where most smokers purchase one or two cigarettes for immediate consumption.

“How many customers would actually spend Rs.600 for an entire packet?” he questioned.

The government has been attempting to collect higher revenue and curtail tobacco use in Sri Lanka by raising taxes and introducing other policies, which also include the depiction of picture warnings on cigarette packets and ban of tobacco farming in Sri Lanka by 2020.

Analysts have criticized the move to raise taxes, saying that the residents would move towards the unregulated, cheap beedi products or smuggled cigarettes, which pay no duty and the sales of these substitutes have skyrocketed since 2016.

Tobacco farmers have also accused politicians of corruption, saying that the politicians are eyeing hefty commissions through allowing more imported tobacco leaves and weakening the local leaf supply.

However, the government’s other aim of generating revenue for the Treasury was a success, with the country’s only cigarette manufacturer, Ceylon Tobacco Company PLC, contributing Rs.117.4 billion in excise taxes, levies and income tax in 2017, up from Rs.98.4 billion in 2016.

Pic by Nisal Baduge