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‘Budget issues’ behind insurer’s cigarette manufacturer damages suit in Korea

| January 28, 2014

The decision by South Korea’s National Health Insurance Service (NHIS) to sue cigarette manufacturers operating in the country has been described by a tobacco industry group as a misguided attempt to solve budget issues, according to a Yonhap News Agency story.

In an English-language statement, the Korea Tobacco Association (KTA) said it was disappointed with the tentative decision by the state-run NHIS to file a suit against tobacco manufacturers.

The suit had ‘little legal merit’ and wasn’t in the best interest of taxpayers, it added.

The NHIS’ board decided on Friday to file a damages suit against KT&G and other tobacco companies seeking up to WON333 billion.

But the Ministry of Health and Welfare opposes the suit and warned that, based on overseas experiences, the NHIS’ chances of winning were low.

It warned too that the cost of the action could be a financial burden to the NHIS.

No decision has been made on when the suit will be filed, but an NHIS official has said that it will be done “as soon as possible”.

In its statement, the KTA noted that the NHIS was ignoring a government directive on how public corporations should not file lawsuits unless the reasons for such suits and the amounts claimed are made clear in advance.

“Litigation against a lawful and highly taxed industry is a reckless attempt to solve NHIS’ budget problems by forcing smokers to pay more than their fair share in health care costs,” Brian Kim, the KTA’s chairman, was quoted as saying.

“Instead of reaching further into the pockets of smokers and exposing Korean taxpayers to years of costly litigation, the NHIS should learn from the failure of similar attempts by other governments and focus on finding a real solution to their budget woes.”

Coffee-house culture under fire in Jordan

| January 28, 2014

The Jordanian government is coming under fire for planning to enforce fully, by the end of this year, an anti-tobacco law passed in 2008, according to an Associated Press report published in The Tampa Tribune, Florida, US.

Enforcement would see the government this year revoke the licenses of all 6,000 coffee shops that serve shisha.

Business owners and smokers are criticizing the push, saying it goes against the culture of a country.

“We are caught between a rock and a hard place whereby the government is trying to force a closure of our businesses,” Mazen Alsaleh, who owns 14 coffee and hookah shops around the country, was quoted as saying.

“I am not defending the hookah or smoking, but we must defend our investments.”

But Health Minister Ali Hyasat, who is spearheading the effort to enforce the smoking ban, said the measure was meant to “save lives, not businesses”.

Hyasat said that smoking was costing lives and more than $1 billion annually in health care programs to treat smokers.

Enforcement started in 2009 with shopping malls and Amman’s QueenAliaInternationalAirport first enacting the smoking ban. They were followed by fast food restaurants.

The law bans smoking in hospitals, schools, cinemas, libraries, museums, government buildings, public transportation and other places to be determined by the health minister.

It prohibits, too, sales of tobacco products to those under the age of 18.

Anti-tobacco law passed in Ethiopia

| January 28, 2014

Ethiopia has passed an anti-tobacco law that includes a ban on ‘smoking in public’, according to a story.

The country’s house of representatives has issued a proclamation that would see the imposition of the ban on tobacco smoking in public places, the raising of cigarette prices through the imposition of ‘enormous taxes’, the inclusion on packs of health warnings, and a ban on the advertising and promotion of tobacco products.

It was not stated in the story when the new regulations would be enforced or by how much cigarette taxes would be increased.

Indian government to sell ITC shares

| January 28, 2014

The Indian government has decided to sell its 11.3 per cent share in ITC, according to a story in the latest issue of the BBM Bommidala Group newsletter.

The government is also selling its shares in Axis Bank (23.58 per cent) and L&T (8.27 per cent).

British American Tobacco, which has about a 30 per cent stake in ITC, reportedly said it was unlikely that it would increase its holding in ITC when the government shares were offered.

“We don’t have any plans to purchase more shares in ITC at this time,” a BAT spokesman was quoted as saying.

Health insurer to seek WON333 billion from cigarette manufacturers in Korea

| January 27, 2014

South Korea’s National Health Insurance Service (NHIS) has said it will file a damages suit against KT&G and other tobacco companies seeking up to WON333 billion, according to a story in The Korea Times.

The decision to go ahead with the claim was made at an NHIS board meeting on Friday, when 11 members voted to proceed and two voted against.

The Ministry of Health and Welfare opposes the suit and requested on Thursday that the NHIS not make any decision at the board meeting.

The ministry sent an official document to the NHIS saying that it understood the purpose of the suit, but warning that, based on overseas experiences, the NHIS’ chances of winning were low.

It warned too that the cost of the action could be a financial burden to the NHIS.

The board members agreed to leave the decision on the timing of the suit to NHIS president Kim Jong-dae, but an NHIS official was quoted as saying that it would be filed “as soon as possible”.

“All cigarette companies operational in Korea could be defendants,” the official said.

The amount to be claimed was based on the costs that the service had incurred in treating small-cell and squamous carcinoma, which a court has ruled are caused by smoking.

The agency has said too that it will work with lawmakers to table a bill aimed at forcing cigarette companies to pay a certain amount towards the treatment costs of patients suffering from smoking-related diseases.

Greek government losing revenue battle

| January 27, 2014

As the Greek government continues to raise tobacco-products taxes as part of the austerity measures demanded by international lenders, it is having to expend more effort on trying to stem the growing tide of the illicit trade in cigarettes, which is being boosted by those tax increases.

According to a story by Andy Dabilis for the Greek Reporter, the government has raised tobacco taxes by more than 20 per cent since the economic crisis began in 2009, and recently announced that another five cents were to be added to the tax charged on a pack of cigarettes.

Austerity-stricken Greeks are responding by increasingly turning to illicit cigarettes that are typically sold for half the price of licit cigarettes.

The government estimates it is losing about €700 million annually to the illegal cigarette trade and the finance ministry said tobacco revenues had decreased by 11 per cent during the past two years to €2.7 billion.

Ilias Asimakopoulos, the chief executive of JT International Hellas, was quoted as saying the illegal cigarette trade had captured more than one-fifth of the local market; so about 4.7 billion illicit cigarettes were entering the Greek market every year.

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