1 / 19

Questions

PRESENTATION 5 Workshops on Tobacco prices and taxation Tobacco prices, illicit trade, and the FCTC. World Health Organization (WHO) and International Union Against Tuberculosis and Lung Disease (The Union). Questions. Why is illicit trade a problem for public health?

saber
Download Presentation

Questions

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. PRESENTATION 5Workshops on Tobacco prices and taxation Tobacco prices, illicit trade, and the FCTC World Health Organization (WHO) and International Union Against Tuberculosis and Lung Disease (The Union)

  2. Questions • Why is illicit trade a problem for public health? • What are the main kinds of illicit trade? • What are the main factors contributing to illicit trade?

  3. A problem for revenue and for public health Loss of government tax revenue. The global illicit cigarette trade in 2009 was about 11.6% of total sales or 657 billion cigarettes p.a. at a loss of government revenue of US$40.5 billion (Joosens, Merriman, Ross, Raw, 2009). Public health. Smuggling tends to increase the availability of low-priced cigarettes (because no tax is paid) and therefore can increase consumption.

  4. Main types of illicit trade • Smuggled tax-paid genuine product (bootlegging) • Smuggled untaxed genuine product (transit/ container smuggling ) (iii) Other illegal manufacturing or sales

  5. Bootlegging and organized transit smuggling (i) Bootlegging • When an individual buys cigarettes in a low-tax jurisdiction and resells them in a high-tax jurisdiction for profit (difference in tax rates) • Relatively small scale and can be addressed through tax harmonization (ii) Organized transit/container/freight smuggling -diverts products from legal distribution to the black market -Large scale, may involve criminal organizations, and represents the main problem in illicit trade

  6. Illegal manufacturing or sales without tax paid (iii) Illegal manufacturing or sales • Production of cigarettes contrary to laws in taxation, licensing, or manufacturing • Includes products sold without excise ribbons, counterfeit tax ribbons, recycled ribbons, and tax ribbons that do not correspond with tax schedules • Can be controlled with strong enforcement of existing laws, and excise ribbon printing security technology

  7. Government are frequently concerned that increases in tobacco taxes will contribute to illicit trade. In example, Sweden and Canada reduced tobacco taxes to minimize smuggling. This resulted in minimal effects on illicit trade and increases in tobacco consumption.

  8. Smuggling Sweden decreased cigarette taxes (17%) due to fear of smuggling in 1998

  9. Canadian Government reduced tobacco tax rates dramatically in February 1993

  10. However, cigarette prices are not the main factor related to the level of smuggling

  11. More important factors contribute to illicit trade… • Unlicensed manufacturers and distributors • Lax anti-smuggling legislation • Public is tolerant/not considered a serious crime • Corruption in the country is high • Tobacco industry is complicit • Organized crime is present

  12. Tobacco smuggling tends to rise in line with the degree of corruptionSmuggling as a function of transparency index

  13. How to effectively control illicit trade: elements of the FCTC protocol to control the tobacco supply chain Licensing Customer identification and verification (due diligence) Tracking and tracing Record-keeping Security and preventive measures Internet and other telecommunication-based modes of sale Limiting, licensing or prohibiting tobacco in free-trade areas and for duty-free sales (major sources of illicit tobacco trade)

  14. Controlling illicit trade Can have a positive impact on government revenues by ensuring tax paid products are within the legal chains of distribution Can have a positive health impact by eliminating cheaper (tax free) products in the market.

  15. Cigarette tax revenue and the illegal cigarette market in Spain 1995-2002 :Spain had a major problem of illicit trade which it addressed and almost eliminated Source: figure is based on data from "Evolución del contrabando de tabaco en España" (2003)

  16. China’s government’s anti-smuggling campaign has had a substantial impact on illegal imports

  17. POTENTIAL GAINS FROM ELIMINATION OF ILLICIT TRADE

  18. Questions • Why is illicit trade a problem for public health? • What are the main kinds of illicit trade? • What is the relationship between domestic tax changes and illicit trade? • What are the main factors contributing to illicit trade?

  19. Questions Why is illicit trade a problem for public health? What are the main kinds of illicit trade? What is the relationship between domestic tax changes and illicit trade? What are the main factors contributing to illicit trade?

More Related