Illicit trade and real prices of cigarettes in Chile

INTRODUCTION

The tobacco industry claims that tobacco taxes are responsible for increased illicit trade in Chile, which they estimated at 37% in 2022. However, the evolution of cigarette consumption, estimated from population surveys, and of tax-paying cigarettes shows a decreasing penetration of illicit trade since 2018.

METHODS

A gap analysis was used to estimate the evolution of illicit trade based on an arithmetic identity stating that total national cigarette consumption over a given period is equal to the registered consumption as paying taxes plus the cigarettes that are consumed nationally without paying taxes.

RESULTS

Illicit trade penetration in Chile was around 10% in 2020, less than half of what the tobacco industry claimed. In addition, the evolution of real prices of cigarettes, calculated using tax collection data, indicates that real prices net of tobacco taxes increased significantly during 2015-2021, a period with no changes in tobacco taxation. The cheapest cigarettes, presumably competing with illicit cigarettes, registered the most significant price increase.

CONCLUSIONS

Claims of increasing illicit trade penetration in Chile are unfounded and are not supported by data on consumption and tax-paying cigarettes.

A Media Analysis of the COVID-19 Tobacco Sales Ban in South Africa

The South African government introduced a nationwide lockdown in March 2020 to mitigate the spread of COVID-19. Among other restrictions, the government banned the sale of tobacco products. The ban lasted for nearly five months. We performed a Google search using the keywords smok*, puff*, lockdown, tobacco, and cigarette* for articles published in English from 23 March 2020 to 18 December 2020. This yielded 441 usable online media articles. We identified and categorised the main arguments made by proponents and opponents of the tobacco sales ban. Three themes were identified: medical, legal, and economic/financial. Legal aspects were covered in 48% of articles, followed by economic (34%), and medical aspects (18%). The media was generally ambivalent about the tobacco sales ban during the first five weeks of lockdown. Sentiment subsequently turned against the ban because the medical rationale was not well communicated by the government. There was limited empirical evidence of a link between smoking and contracting COVID-19, and the sales ban was ineffective since most smokers still purchased cigarettes. Policy framing in the media plays an important role in how the public receives the policy. Any future tobacco control policy intervention should be better considered, especially within the context that cigarettes are easily accessed on the illicit market in South Africa.

Strengthening policies and structures to combat illicit tobacco trade in the Philippines

The Philippines has been seeing an increase in illicit tobacco trade in recent years, undermining the impacts of legal measures such as tobacco products' taxation and regulation due to circumvention of established avenues and costing the government its revenue. Currently, the country has twelve policies related to the prevention of illicit tobacco trade with gaps identified in its lack of licensing systems for tobacco retailers and policies on law enforcement cooperation, which manifests in the country being fully compliant to only 5 of the 16 articles under the World Health Organization's Illicit Tobacco Trade Protocol. It is recommended that the country establish a national agency or framework specifically for illicit tobacco trade to address its gaps under Tracking and Tracing, Due Diligence, and Unlawful Conduct.

Smokeless Tobacco in Uganda: Perceptions among Tobacco Control Stakeholders

The use and sale of smokeless tobacco (SLT) is prohibited in Uganda under the Tobacco Control Act (TCA), 2015. Nonetheless, SLT products remain available, and there are limited and inconsistent data on SLT users. Additionally, the perceptions of tobacco control stakeholders on SLT are unknown, making it difficult to determine barriers to enforcing the ban. This study examined perceptions of tobacco control stakeholders regarding SLT in Uganda. Qualitative semi-structured interviews were conducted with stakeholders who were purposively selected from ministries, semi-autonomous government agencies and Civil Society Organizations. Interviews explored knowledge, attitudes, perceptions of SLT appeal, and user demographics. Data were analysed using Nvivo V.12 software. Participants demonstrated a general lack of awareness of SLT product types and the extent of their use. They believed SLT use was increasing among females and minors and was as harmful to health and the economy as smoking. SLT products were thought to be cheaper than cigarettes and to appeal to minors. Discreet use was thought to help users overcome the cultural aversion towards tobacco use among women and youth in Uganda. There is an urgent need to strengthen the implementation of the SLT ban whilst also increasing efforts to reduce tobacco smoking.

Measuring anomalies in cigarette sales using official data from Spanish provinces: Are the anomalies detected by the Empty Pack Surveys (EPSs) used by Transnational Tobacco Companies (TTCs) the only anomalies?

INTRODUCTION

There is a literature that questions the veracity of the studies commissioned by transnational tobacco companies (TTCs) to measure the illicit tobacco trade. Furthermore, there are studies that have indicated that the empty pack surveys (EPSs) ordered by TTCs overestimate the size of this trade. This study simultaneously analyzed whether the EPSs established in each of the 47 Spanish provinces were accurate and measured anomalies observed in provinces where sales exceed expected values.

METHODS

To achieve the objectives of this study, provincial data on cigarette sales, prices and GDP per capita were used. These data were modeled with machine learning techniques that are widely used to detect anomalies in other areas.

RESULTS

The magnitude of the average anomaly in provinces where sales are higher than their expected values exceeds 40%, while the average anomaly in provinces where sales are lower than their expected values (as detected by the EPSs) is <15%. Furthermore, the results reveal that there is a clear geographical pattern to the provinces in which sales below reasonable values are observed. In addition, the values provided by the EPSs in Spain, as indicated in the previous literature, are slightly overestimated. Finally, some regions bordering other countries or that are highly influenced by tourism have observed sales that are higher than their expected values.

CONCLUSIONS

Cooperation between countries in their tobacco control policies can have better effects than policies developed based on information from a single country. The lack of control over the transactions of tourists and the inhabitants of bordering countries can cause important anomalies that distort the understanding of tobacco consumption that governments have based on official data.

Illicit Tobacco in Lithuania: A Cross-Sectional Survey

Taxation policies are the most cost-effective measure to reduce overall tobacco consumption. However, cigarettes in Lithuania are among the cheapest in the European Union. The threat of the illicit trade is often used to compromise evidence-based policies, pricing policies particularly. The aim of this study was to determine the extent of illicit cigarette consumption in Lithuania and identify the main characteristics of illicit cigarette smokers. The national cross-sectional survey with direct observation of the latest purchased pack of cigarettes was conducted between August and September 2019. In total, 1050 smokers aged ≥18 were interviewed face-to-face. The illicit share of the total consumption of cigarettes per year was 10.7% with 9.7% of smokers showing or describing illicit cigarette packs compared to 17% reported by industry-funded studies. Older smokers, smokers with lower education and heavy smokers were more likely to regularly purchase illicit cigarettes. The average price of an illicit pack was almost two times lower than licit. Although the illicit trade of tobacco products is a serious policy challenge, the threat of an increase in illicit trade should not delay tobacco taxation improvements.

Estimating the Magnitude of Illicit Cigarette Trade in Bangladesh: Protocol for a Mixed-Methods Study

The illicit tobacco trade undermines the effectiveness of tobacco tax policies; increases the availability of cheap cigarettes, which, in turn, increases tobacco use and tobacco related deaths; and causes huge revenue losses to governments. There is limited evidence on the extent of illicit tobacco trade particularly cigarettes in Bangladesh. The paper presents the protocol for a mixed-methods study to estimate the extent of illicit cigarette trade in Bangladesh. The study will address three research questions: (a) What proportion of cigarettes sold as retail are illicit? (b) What are the common types of tax avoidance and tax evasion? (c) Can pack examination from the trash recycle market be considered as a new method to assess illicit trade in comparison to that from retailers and streets? Following an observational research method, data will be collected utilizing empty cigarette packs from three sources: (a) retailers; (b) streets; and (c) trash recycle market. In addition, a structured questionnaire will be used to collect information from retailers selling cigarettes. We will select post codes as Primary Sampling Unit (PSU) using a multi-stage random sampling technique. We will randomly select eight districts from eight divisions stratified by those with land border and non-land border; and within each district, we will randomly select ten postcodes, stratified by rural (five) and urban (five) PSU to ensure maximum geographical variation, leading to a total of eighty post codes from eight districts. The analysis will report the proportions of packs that do not comply with the study definition of illicit. Independent estimates of illicit tobacco are rare in low- and middle-income countries such as Bangladesh. Findings will inform efforts by revenue authorities and others to address the effects of illicit trade and counter tobacco industry claims.

Ten Years of the Tobacco Control Act in New York City

This article describes the impact of the 2009 Family Smoking and Prevention Tobacco Control Act (TCA) on local tobacco control through the lens of New York City's experience during the first 10 years after the TCA was enacted, highlighting one meaningful change and an opportunity that has failed to materialize. Much of the analysis regarding the TCA highlights the U.S. Food and Drug Administration's (FDA) new powers and the TCA's impact on a national level. However, the TCA also opened up opportunities for local governments to pursue sound tobacco control policies that previously seemed fraught with high legal risk. This article focuses on two aspects of the TCA. First, the TCA weakened one of the tobacco industry's most reliable litigation weapons-preemption. Second, the TCA authorized the FDA to combat the illicit trade of tobacco products. Despite clear language in the TCA, the FDA has not signaled an inclination to take action regarding illicit trade in the context of tobacco tax evasion.

Graduated Sovereignty and Global Governance Gaps: Special Economic Zones and the Illicit Trade In Tobacco Products

Illicit trade in tobacco products has been a significant problem globally for many years. It allows cigarettes to be sold far below their legal price and thus contributes to higher consumption, morbidity and mortality, and deprives state treasuries of a substantial amount of revenue. This article identifies special economic zones (SEZs), particularly free trade zones, as a key conduit for this illicit trade. The development of SEZs as weak points in the global governance architecture is explained with reference to the concept of 'graduated sovereignty', whereby the uniform management of territory by modern states has given way to a more spatially selective form of territorial governance, in which some slices of territory are more fully integrated into the world economy than others via various forms of differential regulation. Attempts to comprehensively (re)regulate SEZs, in the face of growing evidence of the dysfunctionalities that they can engender, have so far been unsuccessful. It is concluded that the neo-liberal global economy has facilitated a regulatory 'race to the bottom', a problem that can only ultimately be overcome by international negotiation and agreement.

Empirical measurement of illicit tobacco trade in the Philippines

Cigarette smuggling reduces the price of cigarettes, thwarts youth access restrictions, reduces government revenue, and undercuts the ability of taxes to reduce consumption. The tobacco industry often opposes increases to tobacco taxes on the claim that greater taxes induce more smuggling. To date, little is known about the magnitude of smuggling in the Philippines. his information is necessary to effectively address illicit trade and to measure the impacts of tax changes and the introduction of secure tax markings on illicit trade. This study employs two gap discrepancy methods to estimate the magnitude of illicit trade in cigarettes for the Philippines between 1994 and 2009. First, domestic consumption is compared with tax-paid sales to measure the consumption of illicit cigarettes. Second, imports recorded by the Philippines are compared with exports to the Philippines by trade partners to measure smuggling. Domestic consumption fell short of tax-paid sales for all survey years. The magnitude of these differences and a comparison with a prevalence survey for 2009 suggest a high level of survey under-reporting of smoking. In the late 1990s and the mid 2000s, the Philippines experienced two sharp declines in trade discrepancies, from a high of $750 million in 1995 to a low of $133.7 million in 2008. Discrepancies composed more than one-third of the domestic market in 1995, but only 10 percent in 2009. Hong Kong, Singapore, and China together account for more than 80 percent of the cumulative discrepancies over the period and 74 percent of the discrepancy in 2009. The presence of large discrepancies supports the need to implement an effective tax marking and tobacco track and trace system to reduce illicit trade and support tax collection. The absence of a relation between tax changes and smuggling suggests that potential increases in the excise tax should not be discouraged by illicit trade. Finally, the identification of specific trade partners as primary sources for illicit trade may facilitate targeted efforts in cooperation with these governments to reduce illicit trade.

Illicit cigarette trade in Thailand

The sale and consumption of illicit tobacco increases consumption, impacts public health, reduces tax revenue and provides an argument against tax increases. Thailand has some of the best tobacco control policies in Southeast Asia with one of the highest tobacco tax rates, but illicit trade has the potential to undermine these policies and needs investigating. Two approaches were used to assess illicit trade between 1991 and 2006: method 1, comparison of tobacco used based on tobacco taxes paid and survey data, and method 2, discrepancies between export data from countries exporting tobacco to Thailand and Thai official data regarding imports. A three year average was used to smooth differences due to lags between exports and imports. For 1991-2006, the estimated manufactured cigarette consumption from survey data was considerably lower than sales tax paid, so method 1 did not provide evidence of cigarette tax avoidance. Using method 2 the trade difference between reported imports and exports, indicates 10% of cigarettes consumed in Thailand (242 million packs per year) between 2004 and 2006 were illicit. The loss of revenue amounted to 4,508 million Baht (2002 prices) in the same year, that was 14% of the total cigarette tax revenue. Cigarette excise tax rates had a negative relationship with consumption trends but no relation with the level of illicit trade. There is a need for improved policies against smuggling to combat the rise in illicit tobacco consumption. Regional coordination and implementation of protocols on illicit trade would help reduce incentives for illegal tax avoidance.