A New Approach to Immunological Sexing of Sperm Blecher 1999
Evan Blecher School of Economics, University of Cape Town [email protected] The Economics of...
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Transcript of Evan Blecher School of Economics, University of Cape Town [email protected] The Economics of...
Evan BlecherSchool of Economics, University of Cape Town
The Economics of Tobacco Control in South Africa
Tobacco control in South Africa
• Pre 1993– No tobacco control policy/strategy
• 1993 Legislation– Banned smoking on public transport– Introduced warning labels on packaging and advertising– Coupled with consistent increases in excise taxes– Strongly opposed by tobacco industry
Tobacco control in South Africa
Percentage changes in smoking indicators (1993 to 2000)
Real price per pack ↑ 92.7 %
Aggregate consumption ↓ 26.0 %
Per capita consumption ↓ 37.1 %
Smoking prevalence ↓ 16.9 %
Number of smokers ↓ 2.2 %
Average consumption per smoker ↓ 24.2 %
Source: van Walbeek (2002)
Can increases in tax reduce government revenue?
0
100
200
300
400
19
61
19
65
19
69
19
73
19
77
19
81
19
85
19
89
19
93
19
97
20
01
20
05
Re
al
ex
cis
e r
ate
(i
n c
on
sta
nt
20
00
ce
nts
)
0
1000
2000
3000
4000
5000
Re
al
ex
cis
e r
ev
en
ue
(R
mil
lio
n,
20
00
pri
ce
s)
Real excise rate Real excise revenue
0
200
400
600
800
1000
120019
60
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
Rea
l pri
ce p
er p
ack
of
20
( in
co
nst
ant
2000
cen
ts)
0200
4006008001000
120014001600
18002000
Cig
aret
te c
on
sum
pti
on
(m
illio
ns
of
pac
ks)
Real price of cigarettes Consumption of cigarettes
Prices & consumption
Who gets what?
0
200
400
600
800
100019
61
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
Cen
ts/p
ack
(con
stan
t 200
0 pr
ices
)
Industry price Excise tax Sales tax
Industry revenue: shouldn’t it have been falling?
0
1000
2000
3000
4000
5000
6000
7000
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
R m
illi
on, c
onst
ant 2
000
pric
es
0
300
600
900
1200
1500
1800
2100
Qua
ntit
y of
cig
aret
tes
sold
, mil
lion
s of
pa
cks
Excise revenue (R million, constant 2000 prices, left-hand scale)
Industry revenue (R million, constant 2000 prices, left-hand scale)
Cigarette consumption (millions of packs, right-hand scale)
Input costs: raw tobacco
0
500
1000
1500
2000
2500
3000
66/6
7
68/6
9
70/7
1
72/7
3
74/7
5
76/7
7
78/7
9
80/8
1
82/8
3
84/8
5
86/8
7
88/8
9
90/9
1
92/9
3
94/9
5
96/9
7
98/9
9
00/0
1
Marketing year
Cen
ts/k
g (c
onst
ant
2000
pri
ces)
Flue-cured (AAS) Flue-cured (TB) Dark air-cured (AAS) Dark air-cured (TB)
Flue-cured (TB)
Flue-cured (AAS)
Dark air-cured (TB) Dark air-cured (AAS)
Input costs: paper
0
20
40
60
80
100
120
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
Rea
l pro
duce
r pr
ice
of p
aper
and
pap
er
prod
ucts
(200
0 =
100)
0
100
200
300
400
500
600
Rea
l ind
ustr
y pr
ice
of c
igar
ette
s (c
ents
/pac
k, 2
000
pric
es)
Real producer price of paper and paper products (index value, 2000 = 100, left-hand scale)
Real industry price of cigarettes (cents/pack, base 2000, right-hand scale)
Employment: why has it been falling?
0
1000
2000
3000
4000
5000
6000
1977
1980
1983
1986
1989
1992
1995
1998
2001
Num
ber
of e
mpl
oyee
s
0
5
10
15
20
25
Ave
rage
mon
thly
wag
e bi
ll (R
mil
lion
s,
cons
tant
200
0 pr
ices
)
Number of employees (left-hand scale)
Average monthly wage bill (R millions, constant 2000 prices, 3-year moving average, right-hand scale)
Peak employment
Peak consumption
Merger
Tobacco control in South Africa
• 1999 Legislation– Bans smoking in workplaces & other public places– Bans all advertising, promotion & sponsorship of tobacco– Bans sale of tobacco products to persons younger than 16– Bans free distribution of products– Limits the maximum yield on tar, nicotine & other ingredients
• What did the 1999 legislation do?– Public debate raised the awareness about tobacco risks– Transferred the property rights of clean air to non-smokers– Non-smokers now have the right to demand clean air
Tobacco control in South Africa
Percentage changes in smoking indicators (1993 to 2003)
Real price per pack ↑ 115.6 %
Aggregate consumption ↓ 32.9 %
Per capita consumption ↓ 46.0 %
Smoking prevalence ↓ 26.4 %
Number of smokers ↓ 5.5 %
Average consumption per smoker ↓ 28.9 %
Source: van Walbeek (2005)
Restaurant restrictions
• Two options: become entirely smoke free or separated areas
• Original proposal was for a blanket ban– International Hotel & Restaurant Association Cape Town
Survey: Revenue would fall 32%
• High compliance without police crackdowns despite difficulty in enforcing– Federated Hospitality Association of South Africa
• 85% non-compliance & sales down 37%– Saloojee & Ucko:
“How can a law, that according to them, is being widely ignored result in a loss of more than a third of sales?”
Literature
• Scollo et al (2003)– Studies that do not meet Siegel’s criteria generally find that
legislation has had negative impacts in terms of financial performance; customer satisfaction & employment
– Studies that meet criteria find little impact or positive impact– Scollo & Lal (2004) support this with updated data
• Siegel’s (1992) methodological criteria– Control for economic conditions– Use of independent funding sources– Publication subject to peer review– Measurement of actual events rather than predicted
outcomes or assessments
A model for South Africa
• Real per capita revenue is a function of– Real per capita income– Effect of the legislation– Efficiency of tax collection
• Fixed effects panel model– Aggregate data → no sample selection problem– Provinces (nine) as cross sections– 1995 to 2003
Data
• Real per capita revenue (dependent variable)– Output VAT (sales tax) data from SARS– “Restaurant/Tearoom Selling Food – Consumption Mainly on
Premises”– 37 regional offices aggregated to provinces– Regional CPI & population converts to real & per capita
• Real per capita GDP– No other provincial specific income series available
• Tax collection efficiency variable
Survey
• Database included– 1431 restaurants– 1011 completed (70.6 %)
– 230 established after the implementation (20.7 %) • Conducted by telephone during November 2004 &
January 2005• Sit down restaurants only, excluded takeaways & bars• Some problems
– Sample is not random– Biased towards urban, tourist & business centres
• Positives– Perceptions corroborates VAT data
Results
Estimated Coefficients Excluding Ratio
Including Ratio
Ln Real Per Capita GDP 0.659 0.789
(1.359) (1.714)***
Ban Dummy 0.227 0.063
(5.917)* (0.962)
VAT Collection Ratio 33.034
(3.051)*
R2 adjusted 0.98 0.99
Dependent variable: Ln Real Per Capita Aggregate Revenue
Survey results
• Changes to restaurant layout– Prior
• 54% had specific smoking sections → 74% after• 75% had specific non-smoking sections → 97% after• A quarter have become entirely smoke free
– Occupancy not significantly different– Compliance: 92% believe they are in compliance– In retrospect
• 52% indicate they would not change the status quo• 23% entirely smoke free• 25% ignore
Survey results
• Financial Impact– Capital expenditure
• Mean = R 67 000 ($ 9 571)• Median = R 25 000 ($ 3 571)• Malls & franchises spent more than independents• Linked to restaurant size
– Revenues• Generally no significant impact• Franchises: generally positive• Independents: slightly negative
– Interesting: greater capital expenditure resulted in greater positive impact (franchises)
Change in revenues
4.5%6.1%
8.3%
59.3%
4.3%
12.2%
5.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Decreased by morethan 20 %
Decreased bybetween 10-20 %
Decreased by lessthan 10 %
No change Increased by lessthan 10 %
Increased bybetween 10-20 %
Increased by morethan 20 %
Acceptance by customers
56.2%
31.0%
7.1%4.9%
0.9%
76.7%
18.0%
3.7%1.1% 0.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Very Well Fairly Well Not Very Well Not Well At All Don't Know
No
n
smo
kers
Sm
oke
rs
International evidenceStudies using objective measures to assess economic impact of smoke-free policies in the hospitality industry: studies funded from sources other than the tobacco industry
No effect, positive effect
Negative effect
Taxable sales receipts 25 0
Sales data other 3 0
Employment levels 8 0
Number of establishments 2 0
Number of restaurant/bar permit applications 1 0
Bankruptcy data 2 0
Number of employment insurance claims 2 0
International evidenceStudies using objective measures to assess economic impact of smoke-free policies in the hospitality industry: studies funded from sources with links to the tobacco industry or by the industry itself
No effect, positive effect Negative effect
Taxable sales receipts 0 4
Sales data other 0 2
Employment levels 0 2
Number of establishments 0 1
International evidenceStudies using subjective measures to assess economic impact of smoke-free policies in the hospitality industry: studies funded from sources other than the tobacco industry
No effect, positive effect
Negative effect
Public self-reported intentions or actual patronage of restaurants/bars 18 0
Proprietor predictions/perceptions of sales changes 14 0
Proprietor predictions/perceptions of costs 3 0
Estimated number of overseas visitors 1 0
International evidenceStudies using subjective measures to assess economic impact of smoke-free policies in the hospitality industry: studies funded from sources with links to the tobacco industry or by the industry itself
No effect, positive effect
Negative effect
Public self-reported intentions or actual patronage of restaurants/bars 2 5
Public self-reported spending/time spent 0 2
Proprietor predictions/perceptions of sales changes 1 24
Proprietor estimates of impact on employment 0 9
Proprietor predictions/perceptions of costs 0 1
Conclusion: smoke free
• Legislation has had, if any, a small positive impact on restaurant revenues
• No systematic harm done to restaurant industry• Smoking & non-smoking customers have accepted the
policy well• Inline with international evidence• Implications
– Supports the current legislation– May support further legislation– Supports the implementation in other developing countries
which do not yet have such policies
The options: taxes
• No evidence that illicit trade is a problem of excise• Illicit trade may be a function of the retail price → but
the retail price is a function of industry price as well• Industry is attempting to profit from declining
consumption• Illicit trade is part of a broader organised crime issue