Governments and manufacturers must take a comprehensive approach to the fight against illegal tobacco trade
17 September 2015, Bologna, Italy
Hiking taxes on tobacco products as a means of reducing smoking has backfired. At the Global Tobacco and Nicotine Forum (GTNF), held in Bologna, Italy, today, experts will warn that disproportionate tax increases and regulation have increased the demand for illegal, unregulated and untaxed tobacco products. Christopher Butler of Americans for Tax Reform/Property Rights Alliance will, more specifically, present data and argue that based on the example of the U.S., “there is a direct link between the excessive rise of excise taxes and the induced rise in cigarette smuggling.” A rise in illegal activity which in turn has placed an excessive burden on law enforcement.
In fact, this phenomenon is so pervasive that Professor Ernesto U. Savona, Director of Transcrime at Universita Cattolica in Milan, will clearly call for the need to better understand the root causes and trends in the illicit trade of tobacco products. “The challenge for government officials is how to improve health without increasing crime,” Professor Savona will note.
Illegal tobacco trade certainly hurts the bottom line of tobacco manufacturers, but more importantly, it leads to losses of government revenue. It also makes smoking more appealing to low-income consumers and youth, particularly in underprivileged communities where illegal tobacco is more readily available. Governments also must face the increase in the power of criminal organizations engaged in such illegal trade, that further finance their criminal activity into areas such as human trafficking and terrorism.
Liz Allen, an independent expert and advisor to the International Tax and Investment Centre (ITIC) will tell the industry that a comprehensive and consistent approach is required to address illicit trade. “The necessary conditions for such an approach to be successful are increasing public awareness, making decisions based on adequate, accurate and timely data, enhancing partnerships across all national enforcement agencies, as well as broader international cooperation.” Very important also, as Allen will note, is “the cooperation between governments and law enforcement with manufacturers.”
As recent evidence clearly suggests, such a comprehensive approach can indeed yield significant results. Dorel Fronea, Former Head of National Customs Authority in Romania, will argue that “enhancing cooperation between law enforcement and the tobacco industry is an important tool in the fight against illicit trade in tobacco products.” He will also show that comprehensive measures undertaken by the Romanian government resulted in an exceptional decrease in the level of illicit trade: from 36,3% in January 2010 when the protocols of cooperation between the two sides were signed, to 11,8% in July 2013.
Manufacturers have long been vigilant in the fight against the illicit trade of tobacco products, implementing internal compliance measures, heavily investing in technology and sharing their knowledge with governments. But as Liz Allen will argue, more can be done. “If governments and manufacturers work together, such cooperation will produce mutual benefits across the board.”
About the GTNF
The GTNF (Global Tobacco and Nicotine Forum), organized by Tobacco Reporter magazine, is the world’s leading conference on tobacco and next-generation nicotine products. It brings together industry, commentators, and external experts for three days of discussions and networking. The GTNF debuted in Rio de Janeiro, Brazil, in 2008 and has subsequently been held in Bangalore, India (2010), Antwerp, Belgium (2012), Cape Town, South Africa (2013) and West Virginia, USA (2014). This year it takes place in Bologna, Italy. For more information, visit: www.gtnf-2015.com