This article was originally published in www.nepallivetoday.com on January 8, 2024 by Rhishav Sapkota. Mr. Sapkota is a research intern at Samriddhi Foundation, an economic policy think tank based in Kathmandu. The views expressed in this article are the author’s own and do not represent the views of the organization. Author can be reached at [email protected]
On November 28, 2023, Kathmandu Metropolitan City issued a statement prohibiting the sale of tobacco products packaged in plastic inside its borders beginning December 13, 2023. However, Kathmandu is not the first municipal government to outlaw the sale of tobacco products. Biratnagar Metropolitan City and Kankai Municipality in Morang and Jhapa districts, respectively, made similar choices in April and July last year. According to the Metropolitan, this is the first step toward prohibiting the sale of all tobacco products in the city.
A prohibition on the sale of an addictive carcinogenic substance was welcomed by a substantial percentage of the city’s population. Still, like with other policy judgments, it merits additional scrutiny. It remains to be seen how the Metropolitan will finish this massive, self-imposed task.
Following a claim of legal jurisdiction to carry out such a decision, the Metropolitan specifies three primary reasons for the ban: Negative effects on public health, pollution and sewer clogs produced by such plastic wrapping, and the drain on state money caused by tobacco usage.
The city believes that making it harder for people to sell tobacco will deter others from purchasing it. Will this, however, work?
One of the key challenges that the Metropolis will have in attempting to apply this selling restriction will be the shared jurisdiction of different levels of government and the policy mismatch that results from it.
The Nepali constitution empowers local governments to pass laws covering basic health and sanitation, as well as local market management and environmental protection (Schedule 8). The environment, like health, is subject to concurrent federal, state, and local control (Schedule 9). Significant collaboration and policy consistency at all state levels will be necessary to accomplish a partial tobacco prohibition, which the city claims will eventually become a complete ban. The essence of the implementation challenge is whether the state and federal governments have enough incentive to align their policies with Kathmandu.
The precedent, however, suggests otherwise. When the High Powered Committee for Integrated Development of Bagmati Civilization (HPCIDBC) issued a notice on November 11, 2023, to squatters in the Kathmandu Valley to clear their encroachment on public land and sought KMC’s assistance in clearing those settlements, KMC found itself in a paralyzing quagmire when the Federal Home Ministry refused to immediately support the move. The ministry noted a need for more planning and legal compliance. The tobacco ban is a bootless errand without inter-governmental consensus, which, for the time being, is a far cry.
The federal government will have little incentive to outlaw tobacco products outright because it relies heavily on the tax revenue generated by such products.
The tobacco sector in Nepal is one of the country’s largest taxpayers. In the fiscal year 2079/80, tobacco-based items like cigarettes and bidi contributed 26.22 billion Nepali rupees to the total excise duty collected by the federal government. The whole sum equals 25.22 percent of total excise duty collection, trailing only collection from beer (31.38 percent). Liquor comes in third with a contribution of 24.93 percent. Meanwhile, all other industrial products produced in Nepal accounted for 18.47 percent of total excise duty collections.
The data speaks for itself. The federal government will have little incentive to outlaw tobacco products outright because it relies heavily on the tax revenue generated by such products.
Coincidentally, KMC’s decision to ban plastic-wrapped tobacco items comes not long after New Zealand abandoned its ambitious smoking ‘generation ban’ to “help fund tax cuts,” which was set to go into effect in July, 2024.
To make a product ban successful, the incentives to accept the restriction must be greater than the incentives to ignore it, especially for the sellers. The Municipality Executive has the authority under the KMC’s Local Government Operation Act (2074), to control, inspect, and regulate the sale and consumption of consumer goods with negative effects on public health, as well as environmental pollution and dangerous substances. KMC’s own Public Health Act (2080), which the city has cited in its statement, requires a permit to sell tobacco-based products. It also allows the city to designate limited and open areas for the sale of such products. For now, KMC has also warned the shop owners that it will cancel their permits if they find repeated violations of the prohibition. Assuming KMC successfully inspects sellers throughout the city, which appears to be unfeasible given the city’s lack of a robust inspection apparatus, it further raises the question of whether the arm-twisting will be sufficient to deter tobacco sales.
The ban’s supply-side dynamics are still complicated. Even if a comprehensive prohibition on sales is enacted, there is still room for cross-border smuggling. KMC shares its borders with a metropolitan city and nine other municipalities. Lalitpur Metropolitan City and the municipalities of Budhanilkantha, Chandragiri, Gokarneshwor, Kageswori-Manohara, Kirtipur, Madhyapur Thimi, Nagarjun, Tarkeswor, and Tokha all share borders with KMC. Buyers can still purchase tobacco goods in these places if KMC’s neighbors do not follow suit with the tobacco ban. As with any banned commodity, the creation of black markets for such things within KMC is unavoidable, raising the prices of these products and contradicting KMC’s original motive for the ban.
To add to the stalemate, on December 15, the Patan High Court issued an interim order suspending KMC’s tobacco ban until the final verdict on the writ case filed by Shri Ram Tobacco Udhyog. The corporation filed a writ petition against KMC, claiming that it had a major impact on their legal operations. It further stated that it was already planning to use biodegradable packaging in all of its products beginning April 13, 2024, as per Nepal’s government regulation.
The World Health Organization estimated that 80 percent of the world’s 1.3 billion tobacco users reside in low- and middle-income nations and that tobacco kills up to half of those who do not quit. Its position is that tobacco control regulations generate more cash for health and development efforts. In 2006, Nepal also ratified the WHO Framework Convention on Tobacco Control (FCTC), which envisions a tobacco-free society. A 2019 survey revealed that 28.9 percent of those aged 15 to 69 used smoked tobacco or smokeless tobacco products. It also revealed that a smoker in Nepal smoked an average of 151 cigarettes each month, which cost them approximately 1049.3 rupees.
For the time being, KMC’s partial or eventual blanket ban on tobacco sales, while a wise step for public health, will be a token gesture if not adequately implemented. It will, in some ways, expose the city’s bootstrap mentality, in which policy enactment is more significant than policy implementation.