THE TOBACCO INSTITUTE OF SOUTH AFRICA

 

SUBMISSIONS TO THE SELECT COMMITTEE ON SOCIAL SERVICES ON THE TOBACCO PRODUCTS CONTROL AMENDMENT BILL [B 24B – 2006]

 

 

               INTRODUCTION

1.                       The Tobacco Institute of South Africa ("TISA") is a voluntary industry association representing tobacco growers, leaf dealers and manufacturers of tobacco products in South Africa.  We represent more than 95% of the total legal tobacco industry in this country, which equates to approximately 76% of total tobacco consumption; illicit trade equates to over 20%.

2.                       TISA has considered the Tobacco Products Control Amendment Bill, No. 24 of 2006 ("the Bill").  These written submissions are made in response to the invitation published in the national press on 5 August 2007. 

3.                       We acknowledge and support the role of the Select Committee on Social Services ("the Committee") in ensuring that draft legislation is properly considered in the context of the government's objectives.  We acknowledge also that tobacco is a product which poses health risks and accordingly that one of the government's objectives must be to take steps to reduce the harmful effects of tobacco use.  On this basis we have no objection to many of the provisions contained in the Bill.  At the same time, however, we must stress that we represent a legal industry which produces a legal product; an industry which makes a huge contribution to the economy of this country.

4.                       In these submissions we, firstly, provide some limited information on the economic and social importance of the tobacco industry and the need for legislative change.  We thereafter deal with our involvement in the legislation process thus far.  Lastly, we comment on 4 issues raised at a previous hearing of the Committee.

 

               THE ECONOMIC AND SOCIAL IMPORTANCE OF THE TOBACCO INDUSTRY

5.                       Tobacco is one of the most labour-intensive crops in the agricultural sector.  Currently there are approximately 170 tobacco farmers in South Africa who employ over 12 000 workers, who in turn have approximately 50 000 dependants.  Approximately 1 000 others are employed by processors of tobacco leaf. Being a labour-intensive industry, many tobacco farmers are involved in the provision of facilities such as clinics, schools and crèches.  The manufacturing sector employs approximately 3 000 people, who produce the tobacco products consumed by approximately 5 million adult South Africans. In total, approximately 17 000 people are employed in the legal tobacco industry, who provide a livelihood for about 75 000 people, most of whom are in deep rural areas where employment opportunities are extremely limited. This excludes the multiplier effect of jobs related to a number of other industries supplying inputs and services to the industry.

6.                       The importance of the tobacco industry cannot only be measured with regard to those people employed by and dependant on it.  As significantly, the tobacco industry contributes approximately R8 billion to the South African fiscus in excise duties and VAT alone.  This amount is in addition to the income tax paid by the growers and manufacturers, and the individuals employed by them.

 

THE NEED FOR LEGISLATIVE CHANGE

7.                       TISA supports the need for the tobacco industry and the use of tobacco products to be regulated.  This is a logical consequence of the risk associated with tobacco products.  TISA also agrees that certain amendments to the current legislation[1] are urgently required.  

8.                       Support for certain legislative changes, however, does not justify over-regulation. Over-regulation can have entirely unintended consequences, in particular the stimulation of the illegal trade in tobacco products.  The incidence and adverse consequences of illegal trading in tobacco products should not be underestimated. More than 10 million cigarettes are sold illegally every day in South Africa (up from 8 million per day since 2005), with a total excise loss of approximately R1.4 billion annually for government, and a similar loss for the tobacco industry.  The growth in the illegal trade has paralleled the tightening of legislative restrictions.  While we are not suggesting that there is a complete correlation between the two, there is no doubt that the illegal trade has flourished in the context of an over-regulated environment.  We request the Committee to take this into consideration when deliberating on the Bill.

 

TISA'S INVOLVEMENT IN THE LEGISLATIVE PROCESS THUS FAR

9.                       In 2006 a draft of the Bill was circulated to stakeholders, including TISA.  Subsequent thereto, apparently on the advice of Parliamentary legal advisors, the draft bill was divided into two: some provisions were included in the Bill, having been identified for passing in terms of section 75 of the Constitution,[2] while many of the other provisions in the draft bill were apparently left over for later processing in terms of section 76 of the Constitution. 

10.                   TISA has consistently acknowledged the need for legislative reform.  When the Bill was placed before the National Assembly, TISA made both written submissions[3] and an oral presentation to the Portfolio Committee,[4] and appreciated the open and constructive way in which the Portfolio Committee dealt with the Bill.

11.                   Our participation and submissions to the Portfolio Committee put forward a number of concerns we had with the Bill in the form that it was at that stage.  We were pleased that certain issues raised by us were also of concern to the Portfolio Committee, resulting in some of the provisions being rephrased or excluded.

12.                   A good example of the constructive engagement between ourselves and the Portfolio Committee is reflected in the proposed new section 6A of the Bill, which deals with exemptions.  At the Portfolio Committee hearings, we proposed the retention of the existing definition of "tobacco product" so as to exclude snus from the definition.  We deal with this issue more fully in paragraph 17 below.  When it became clear to us that the Portfolio Committee was unwilling to accommodate our proposal, we suggested, as a compromise measure, the inclusion of an exemption provision in the Bill so as to permit the Minister to exempt certain tobacco products (in our view, in particular snus) from the provisions of the Act.  The Portfolio Committee substantially accommodated this proposal.

13.                   We wish to record those issues raised before the Portfolio Committee that were not accepted and remain unchanged in the current Bill, and which therefore remain of concern to us. 

14.                   The first is the approach in the Bill to the manufacture and exporting of tobacco products.  Section 3A(3) prescribes that South African regulatory standards will apply to the tobacco products exported to countries where no regulatory standards exist. TISA believes that such a provision has the effect of South Africa imposing its own standards on countries which, for whatever reason, have elected not to impose standards themselves.  TISA believes that this is inappropriate and that South African legislation should not de facto seek to impose South Africa's prescribed standards on foreign jurisdictions.  

15.                   The second issue raised by us which was not accepted by the Portfolio Committee, was the breadth of the Minister's regulatory powers.  In our view the current section 6(1)(e) of the Act, which gives the Minister the power to make regulations regarding "any other matter required or permitted to be prescribed in terms of the provisions of this Act to achieve the objects of this Act", is a sufficiently wide generic regulatory power which does not require amendment or amplification. 

16.                   We turn now to deal with 4 issues which, we respectfully submit, require careful consideration by the Committee.  All of them, we understand, were raised at a previous hearing of the Committee.   

 

THE DEFINITION OF "TOBACCO PRODUCT" AND THE PROPOSED NEW EXEMPTION PROVISION

17.                   Snus is a product which contains tobacco, but which is not smoked, inhaled, chewed, sniffed or sucked.  Accordingly, snus does not currently fall within the definition of "tobacco product".  Snus is sold in pouches much like small teabags.  The pouch is placed in the mouth, with the emissions absorbed through the gums.  Since the tobacco is not burned, no tar is created.  Those of our members involved in the manufacture of snus contend that, based on independent research, snus – specifically Swedish-style pasteurised snus – is substantially less harmful than those tobacco products which are burned, and it naturally has no impact on non-users. 

18.                   From the point of view of TISA, we support the need for legislation to regulate the manufacture, consumption and promotion of snus.  We, however, believe that this can best be done through separate legislation. It appears that too little consideration has been given as to whether the incorporation of snus in the proposed new definition of "tobacco product" will assist in achieving the purposes of the Act as set out in the amended Preamble, and whether, with reference to snus, there are potentially less restrictive means to achieve those purposes.[5]

19.                   As stated in paragraph 12 above, when it became clear to us that there was little support for retaining the current definition of "tobacco product", we proposed an exemption provision.  Our proposal was then amended by the Portfolio Committee which eventually approved the current proposed new section 6A.  In our submission to the Portfolio Committee, we suggested that the exemption provision should make reference to harm reduction properties.  This was specifically proposed with reference to snus.  The exemption provision proposed by us read as follows:

"The Minister may by notice in the Gazette exempt any tobacco product from a provision of this Act on such conditions as may be determined by the Minister in the notice, provided that, in the opinion of the Minister, it is in the public interest for the particular tobacco product to be so exempted, taking into consideration its harm reduction properties." [emphasis added]

 

We remain of the view that it would be beneficial for reference to be made to harm reduction properties.  In this way, the Minister will not be able to exempt all tobacco products if it is in the public interest for her to do so, but only those in respect of which it can be shown that they have harm reduction properties.  Snus would be an obvious example of such a tobacco product, but not necessarily limited to snus only.

              

               AGE LIMIT PROVISIONS

20.                   A very early draft of the Bill (ie before the Bill was divided into a section 75 Bill and a section 76 Bill) contained a provision to the effect that the age limit in respect of the sale of tobacco products to and by persons should be increased from 16 to 18 years.  This provision has been excluded from the Bill. 

21.                   For many years, long before the issue was first raised in draft legislation, TISA and its members have actively supported the raising of the age limit from 16 years to 18 years, the internationally accepted age limit.  By means of a dedicated Youth Smoking Prevention campaign, TISA encouraged and assisted retailers to ensure that, despite the 16-year restriction in the current legislation, tobacco products should not be sold by or to persons under 18 years.

22.                   The exclusion of the age limit provision from the Bill has resulted in two bizarre anomalies.  Firstly, the proposed new section 2(6) obliges owners and persons in control of public places to ensure that persons under 18 are not permitted to enter designated smoking areas, and obliges employers to ensure the same in relation to designated smoking areas within workplaces.  However, by retaining the 16-year provision in relation to the sale and purchase of tobacco products, a bizarre outcome results.  A 16 or 17 year old can legally purchase or sell a tobacco product, but cannot enter a designated smoking area.  The second bizarre anomaly concerns the proposed new section 2(1)(a)(iii), which prohibits any person from smoking a tobacco product in "any motor vehicle with a child under the age of 12 years".  This means that a child from ages of 12 to 17 can be present in a motor vehicle in which tobacco products are being consumed, but not in a designated area of a restaurant.

23.                   These anomalies will be removed if the age limit for all purposes is raised to 18.  TISA fully supports the age limit for all purposes being 18, whether in relation to motor vehicles, designated smoking areas or the right to purchase or sell tobacco products.  In addition, increasing the age limit for all purposes to 18 would ensure a greater alignment between the Act and the World Health Organisation Framework Convention on Tobacco Control.[6]  The proposed amendment to the Preamble to the Act[7] records that this is one of the objects of the proposed amendments.

 

LOW IGNITION PROPENSITY (LIP) CIGARETTES

24.                   Low ignition propensity cigarettes are designed to extinguish when the smoker has not inhaled on the cigarette for a certain period of time.  This design was introduced as a safety feature to prevent lit cigarettes from posing a fire hazard.  However the incorporation of such a design to cigarettes does have cost and health implications that must be acknowledged and considered before the passing of any regulation relating to this tobacco design product.  TISA strongly submits that the introduction of ignition propensity cigarettes should only be done on the basis of extensive consultation and research, in particular with regard to the applicable product standards, and in accordance with prevailing capacity in this country.

 

 

PENALTY PROVISIONS

 

25.                   In section 6 of the Bill, an amendment to section 7 of the Act is proposed in which penalties for contravention of the Act are set at maximum amounts, ranging from R500.00 to R1 million. TISA's only proposal in this regard is that the maximum penalties should be proportional to the offences potentially being committed.  TISA therefore requests the Committee to give careful consideration to the relationship between the offences and the proposed maximum penalties.   


               CONCLUSION

26.                   TISA supports the need for the tobacco industry to be regulated.  It wishes to work closely with the Select Committee, the Portfolio Committee, the Department of Health and other role players in preparing legislation that meets the government's objectives.  At the same time, TISA remains very concerned about the risk of over-regulating the tobacco industry.  As set out more fully in paragraph 8 above, over-regulation can have the effect of encouraging and stimulating the illicit trade, which remains one of the biggest stumbling blocks to the government achieving its objectives. 

27.                   Accordingly, while TISA does not oppose the passing of the Bill, it requests the Committee to give earnest and considered attention to the issues we have raised above.  If the amendments which we have proposed are adopted, the end result will be a Bill which is fairer and more workable, and which has a better chance of ensuring that the government's objectives are achieved.

17 August 2007

oooOOOOooo



[1] Tobacco Products Control Act, No. 83 of 1993 ("the Act")

[2] Constitution of the Republic of South Africa, 1996 ("the Constitution").

[3] Submissions to the Portfolio Committee on the Tobacco Products Control Amendment Bill, 2006 (13 October 2006).

[4] On 23 January 2007.

[5] See section 36 of the Constitution

[6] See Article 16 thereof

[7] Paragraph 6 of the Bill