Timeline for Russia's Anti-Smoking Bill Is Delayed

Source from:  The Wall Street Journal Interactive Edition  10/17/2012

A draft bill seeking to dramatically restrict smoking in Russia is unlikely to make its way to parliament before spring 2013, a health ministry spokeswoman said Tuesday. The initial timeline for the bill, which the ministry formally unveiled on Friday, called for the legislation to be reviewed by the government on Oct. 18. In a best-case scenario the bill was to be presented to the State Duma on Nov. 1. Once there, the bill is largely expected to pass. But Russian lawmakers now say the bill will unlikely be heard before the spring session of parliament, because the law requires a series of public hearings and expert panels to be convened first. The draft bill contains strict measures banning smoking in most public places, restricting advertising and limiting where tobacco can be sold. Russia is the world's second-largest tobacco market by volume, and suggestions of a speedy legislative process for the bill weighed heavily on tobacco stocks Tuesday. Japan Tobacco Inc., which controls the largest share of the Russian market, ended off 4% on Monday in Tokyo. British American Tobacco PLC, which is third-largest, was trading down 2.2% at 14:40 GMT in London, and No. 4 player, Imperial Tobacco Group PLC, was similarly down 1.7%. Analysts with UBS said Tuesday that they estimate the Russian market makes up around 11% of Japan Tobacco's sales, 8% of British American's and 4% for Imperial Tobacco. The draft law calls for the immediate outlawing of cigarette advertising and would phase in bans on public smoking and kiosk sales by 2015. While the current proposal doesn't include specific provisions for raising taxes on tobacco products—which cost a little more than $1 a pack—the possibility has been widely discussed. In a statement, Imperial Tobacco urged that "a sensible approach" be taken "to tobacco taxation policy." "Unfortunately, the main impact of tax shocks on smokers is the encouragement of illicit trade," the company said. British American said that while it recognized the need to regulate tobacco, it felt the "restrictions should be justified, well-considered and consistent." "They should take into account the realities of the Russian market. Otherwise they will either bring about unintended consequences or fail to achieve their aim," the company said. A spokesperson for Japan Tobacco had no immediate comment. Enditem