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Exaggerating the economic importance of the industry

One of the strategies used by the tobacco industry to influence political processes is to exaggerate its own economic importance by producing and disseminating data on employment, tax contributions, and other indicators.1

Arguments related to tax revenue have historically been used by sectors of the tobacco industry to advocate for reductions in the tax burden on their products. The justification is that lower taxes would allow prices to decrease, making legal products more competitive in relation to illicit ones. This would encourage a shift in consumption from the informal market to the formal market, which generates tax revenue.2

However, Brazil’s own experience shows a different reality. In the late 1990s, there was indeed a reduction in taxation. But instead of increasing, tax revenue declined, as companies made only minimal reductions—or, in some cases, even increased—the price of cigarettes.3 In addition, evidence shows that increasing taxes to raise the price of tobacco products is the single most effective measure to reduce consumption.

A potential increase in tax revenue has also been used as an argument to push for the legalization of the production and trade of Electronic Smoking Devices (ESDs) in Brazil. In 2024, PMI Impact—an initiative by Philip Morris International—funded a study conducted by the School of Multidimensional Security of the Institute of International Relations at the University of São Paulo, which estimated that Brazil could lose R$ 7.7 billion in state and federal tax revenue in 2025 due to the illegal trade of ESDs.4

In addition to often being overestimated, such claims also ignore the negative economic impacts of tobacco use.1 In Brazil, in 2015 alone, smoking was responsible for 156,300 deaths, 229,000 acute myocardial infarctions, 59,500 strokes, and 77,500 cancer diagnoses. This resulted in a total cost of R$ 56.9 billion—nearly R$ 40 billion in healthcare expenses and about R$ 17 billion in indirect costs due to productivity losses from premature death and disability.5 6 By comparison, tax revenue from tobacco product sales in the country that year was approximately R$ 13 billion.5

In the context of discussions on changes to the regulation of ESDs in Brazil, a study commissioned by BAT Brasil from the Federation of Industries of the State of Minas Gerais (FIEMG) estimated that legalization could generate more than 100,000 jobs in the country, most of them in agriculture.7 However, the production of ESDs requires fewer leaves than the manufacture of combustible products and, according to calculations by the website O Joio e O Trigo based on data from internal documents of the e-cigarette manufacturer Juul, fewer than 100 rural producers would be enough to meet the demand projected by BAT in a legalization scenario in the country.8

These examples indicate that the economic arguments put forward by the tobacco industry follow a pattern of overstating benefits and omitting costs, both economic and social. Therefore, regulatory decisions and public policies must be based on the public interest and protected from the commercial interests of the tobacco industry, in line with Article 5.3 of the Framework Convention on Tobacco Control (WHO FCTC).9

Tobacco industry interference with tobacco control.

Documento que define e relata algumas das interferências da indústria do tabaco.

Referência

WORLD HEALTH ORGANIZATION.Tobacco industry interference with tobacco control.Genebra, 2008. Disponível em: http://whqlibdoc.who.int/publications/2008/9789241597340_eng.pdf?ua=1 Acesso em:14 jan. 2014.

 

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