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BATU warns of illicit trade as tobacco law looms

British American Tobacco Uganda (BATU) has raised its concerns over the Tobacco Control Bill that is before parliament. BATU, the main tobacco company in the country, considers some of the clauses in the bill a violation of trade deals.

The company disclosed its anxiety over the bill at a recent press conference in Kampala. The company’s chairman, Elly Karuhanga, called on government to tread carefully and not pass the bill in its current form.

“It will encourage a lot of illicit business,” he said, adding: “some of these polices need to be revisited.” Karuhanga referred to the bill as “unimplementable.”

The bill seeks to control the habit of smoking, especially in public places, as well as protect people from cigarette-related diseases. The Tobacco Control bill 2014 is still at the committee stage. It also limits advertisement of products related to tobacco, and places the age for eligible smoking at 21 years.

BATU’s managing director, Jonathan D’Souza, feels that out of the 43 clauses within the bill, about nine are not practicable and could deny the government huge revenue from taxes.

“We feel these [clauses] are draconian and not evidence-based,” he said.

BATU will have to deal with strong opposition from public health advocates such as the World Health Organization. The health body, through the Framework Convention on Tobacco Control, continues to lobby for a decrease on the advertising, packaging and sale of tobacco products.

BATU, nevertheless, fears the bill could spur illicit trade of tobacco. According to the Tobacco (Control and Marketing) Act 1967, BATU provides seeds for the farmers who are only required to sell to BATU.

This could all change if the bill is passed with BATU having no control over the grower’s choices, since the farmers will be free to sell to the highest bidder. The company revealed that such illicit trade had an impact on its 2013 sales, which went down by 19 per cent.

A 43 per cent increase on excise duty also had an impact on the sales with the annual profit after tax falling by eight per cent in 2013. The company says higher taxes could further affect the amount of tax the company pays to government. The company’s contribution to government revenue has reduced to Shs 63bn in 2013, from Shs 73bn in 2012.

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