A major new World Bank (WB) report entitled Confronting Tobacco Illicit Trade: A Global Review of Country Experiences underscores that tobacco taxes play only a minor role in illicit trade and that addressing illicit trade and raising tobacco taxes are mutually reinforcing actions.
“The threat of illicit trade is a false argument that the tobacco industry always uses to oppose effective tobacco tax increases,” said Dr Ulysses Dorotheo, executive director of the Southeast Asia Tobacco Control Alliance (SEATCA).
“This new WB report exposes the flaws of this argument. Worldwide evidence shows that illicit trade is much less in countries with high tobacco taxes and prices than in countries with low tobacco taxes and prices. Non-price factors such as corruption, weak regulatory frameworks and the availability of informal distribution networks appear to be far more important factors. Tobacco companies simply want to keep cigarettes cheap and affordable to the youth and the poor.”
The report states, "Countries as different in levels of economic and institutional development as the United Kingdom, Kenya and Georgia have all successfully improved the effectiveness of their tobacco tax administration and, by doing so, reduced tobacco illicit trade while increasing tobacco taxes and tobacco tax revenues."