Remarks by Arup Banerji, World Bank Country Director for Eastern Europe, delivered at the roundtable “Joining efforts to strengthen tobacco control legislation in Ukraine,” to celebrate 15 years of Ukraine joining the WHO Framework Convention on Tobacco Control (FCTC) – March 24, 2021
Distinguished colleagues, ladies and gentlemen. Thank you for inviting me to this important event.
Today, it is important to note that Ukraine is reeling under the terrible impact of COVID-19. Tragically, over 30,000 Ukrainians have lost their lives to the epidemic. But it is also important to recognize that tobacco smoking by itself kills between 84,000 and 115,000 Ukrainians every year[i]—three times the number of people lost to COVID-19.
And why this alarming fatality level? Because today, every second man and every sixth woman in Ukraine is a smoker.[ii] Smoking rates among Ukrainian men are two and a half times the levels in the United States or United Kingdom, and even one and a half times those in neighboring Poland.[iii]
Ukraine has made good progress in the 15 years since ratifying the FCTC. Just in the eight years since 2013, the number of daily smokers in Ukraine has fallen by about 40 percent. And this is because of Ukraine’s adherence to FCTC commitments, including by systematically increasing tobacco taxation, banning smoking in restaurants, workplaces, and other public locations, and curbing cigarette advertising.
One of the major achievements during this period is the progress on FCTC Article 6 on price and tax measures to curb tobacco consumption. Ukraine increased the ad valorem component of its tobacco tax several times between 2008 and 2012, and in 2008, introduced a specific minimum excise tax that has also increased over the years. A key moment was the 2017 decision to adopt a seven-year plan to harmonize tobacco taxation rates with those of the EU—for which the World Bank was proud to provide technical advice.
A very important benchmark in this plan was, in January 2021, an increase in the excise tax on heated tobacco products to equal the minimum excise duty on cigarettes. This is an extremely important measure, and one that we strongly believe should be maintained.
Why do I say this? Because tobacco taxation, including taxation of heated tobacco products, is both good science and good economics.
It is good science. There is extensive scientific literature to show that tobacco taxation, by reducing tobacco use, reduces both illness and death. And this is not just for cigarettes. The U.S. CDC says that heated tobacco products have not been shown to be any less harmful than conventional tobacco products,[iv] and according to the WHO, they contain a greater number of harmful and potentially harmful chemicals than a regular cigarette.[v]
And it is good economics. Tobacco taxation raises a stream of resources that are critical to financing important public benefits. In 2020, for example, the Government collected about 54.7 billion hryvnas from tobacco excise taxes (equivalent to 1.3 percent of GDP, or almost half of the financing of the Program of Medical Guarantees). More importantly, by reducing tobacco-related disease, Ukraine saves future health-related expenses—and most importantly, saves lives.
Tobacco taxation is thus important to preserving Ukraine’s future. Like Dr. Perebyinis and Dr. Berdzulin, I am particularly concerned about younger smokers. Every fifth child in the 13–15-year age group smokes cigarettes or heated tobacco products, and the number has been increasing.[vi] An effective tobacco control program needs to focus on curbing consumption among the youth, including by making heated tobacco products that are very popular among teenagers expensive enough that children do not take up the habit of smoking.
Ladies and gentlemen, today we celebrate Ukraine’s progress since ratifying the FCTC, but there is still a long way to go. In conclusion, I would like to underscore the importance of continuing to implement the seven-year tobacco tax plan. As Ukraine works toward a healthy and prosperous future, the World Bank looks forward to supporting you.
[i] https://gas.ctsu.ox.ac.uk/tobacco/C4303.pdf, and also cited in World Bank reports on the tobacco tax in Ukraine.
[ii] According to the 2020 STEPS survey conducted by the WHO and co-financed by the World Bank. Data were collected in 2019.