Illicit trade in tobacco products: recent trends and coming challenges.

BACKGROUND: Illicit trade in tobacco products is a menace to the goal of eliminating tobacco consumption. Although tax policy is very effective in reducing consumption, illicit trade can reduce (though not eliminate) its effectiveness. METHODS: This article discusses the recent evolution of illicit trade and the context in which it occurred; the new methods that have been developed to measure it and, finally, the challenges in the next phase in the control of illicit trade. RESULTS: There has been a remarkable stability in the penetration of cigarette illicit trade in the past decade. Such a stability, however, occurred in a world of shrinking tobacco consumption, implying a decreasing absolute illicit trade. Most countries have progressed in increasing tobacco taxes and changing tax structures. Prices of illicit cigarettes follow legal cigarette prices. Concomitantly, many new studies, independent from the tobacco industry, have been conducted allowing for better understanding of the illicit trade and providing inputs to its solution. The entry into force of the WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products provides both a global and a national policy framework to further curb illicit trade. Instruments such as track-and-trace systems must be promoted and adopted to maximise reductions in illicit trade. CONCLUSIONS: Global efforts to curb the illicit trade in tobacco products are gaining momentum and progress has been made in many parts of the world. The next decade can witness a decisive decrease in tobacco consumption, both licit and illicit, if countries further engage in international collaboration.

The potential global gains in health and revenue from increased taxation of tobacco, alcohol and sugar-sweetened beverages: a modelling analysis.

Introduction: Globally, a growing burden of morbidity and mortality is attributable to lifestyle behaviours, and in particular to the consumption of tobacco, alcohol and sugar-sweetened beverages (SSB). In low-income and middle-income countries, this increased disease burden falls on already encumbered and resource-constrained healthcare systems. Fiscal policies, specifically taxation, can lower consumption of tobacco, alcohol and SSB while raising government revenues. Methods: We simulated the health and economic effects of taxing cigarettes, alcohol and SSB over 50 years for 30-79 years old populations using separate mathematical models for each commodity that incorporated country-level epidemiological, demographic and consumption data. Based on data availability, national-level health effects of higher tobacco, alcohol and SSB taxes were simulated in 141, 166 and 176 countries, respectively, which represented 92%, 97% and 95% of the global population, respectively. Economic effects for tobacco, alcohol and SSB were estimated for countries representing 91%, 43% and 83% of the global population, respectively. These estimates were extrapolated to the global level by matching countries according to income level. Results: Over 50 years, taxes that raise the retail price of tobacco, alcoholic beverages and SSB by 20% could result in a global gain of 160.7 million (95% uncertainty interval (UI): 96.3 to 225.2 million), 227.4 million (UI: 161.2 to 293.6 million) and 24.3 million (UI: 15.7 to 35.4 million) additional life years, respectively. Conclusion: Excise tax increases on tobacco, alcohol and SSB can produce substantial health gains by reducing premature mortality while raising government revenues, which could be used to increase public health funding.

An international analysis of the price and affordability of beer.

AIMS: To apply methods for measuring the affordability of beer in a large cross section of countries, and to investigate trends in affordability of beer over time. METHODS: We use the Relative Income Price (RIP), which uses per capita GDP, to measure the affordability of beer in up to 92 countries from 1990 to 2016 (69 countries were included in 1990, however the survey has since grown to include 92 countries). In addition to affordability, we also investigate trends in the price of beer. RESULTS: While beer is, on average, similarly priced in high-income (HICs) and low- and middle-income countries (LMICs), it is significantly more affordable in HICs. There is significant variation in both price and affordability in HICs and in LMICs. Beer has become cheaper in real terms in 49% (18/37) of HICs and 43% (20/46) of LMICs. Beer became more affordable in most HICs (RIP: 30/37 or 81%) and LMICs (RIP: 42/44 or 95%). CONCLUSIONS: The increased affordability over time of beer in most countries raises concerns about public health. Governments need to increase taxes on beer so that it becomes less affordable over time, in an effort to improve public health.

Global Trends in the Affordability of Sugar-Sweetened Beverages, 1990-2016.

INTRODUCTION: The objective of this study was to quantify changes in the affordability of sugar-sweetened beverages, a product implicated as a contributor to rising rates of obesity worldwide, as a function of product price and personal income. METHODS: We used international survey data in a retrospective analysis of 40 high-income and 42 low-income and middle-income countries from 1990 to 2016. Prices of sugar-sweetened beverages were from the Economist Intelligence Unit's World Cost of Living Survey. Income and inflation data were from the International Monetary Fund's World Economic Outlook Database. The measure of affordability was the average annual percentage change in the relative-income price of sugar-sweetened beverages, which is the annual rate of change in the proportion of per capita gross domestic product needed to purchase 100 L of Coca-Cola in each country in each year of the study. RESULTS: In 79 of 82 countries, the proportion of income needed to purchase sugar-sweetened beverages declined on average (using annual measures) during the study period. This pattern, described as an increase in the affordability of sugar-sweetened beverages, indicated that sugar-sweetened beverages became more affordable more rapidly in low-income and middle-income countries than in high-income countries, a fact largely attributable to the higher rate of income growth in those countries than to a decline in the real price of sugar-sweetened beverages. CONCLUSION: Without deliberate policy action to raise prices, sugar-sweetened beverages are likely to become more affordable and more widely consumed around the world.

Evaluating South Africa's tobacco control policy using a synthetic control method.

BACKGROUND: South Africa has since 1994 consistently increased the excise tax on cigarettes to maintain a total tax burden of 50% (1997-2003) and 52% (after 2004) of the average retail selling price. Between 1994 and 2004, the real (inflation-adjusted) excise tax increased by 249%, and the average real retail price of cigarettes increased by 110%. In addition, advertising and smoking bans were implemented in 2001. These measures, which we collectively refer to as tax-led, coincided with a 46% decrease in per capita consumption of cigarettes. No evaluation of South Africa's tobacco control policies has created a counterfactual of what would have happened if the tax-led measures had not occurred. OBJECTIVE: (1) To create a credible counterfactual of what would have happened to per capita cigarette consumption if the tax-led measures had not happened. (2) To use this counterfactual to estimate their impact on cigarette consumption in South Africa. METHOD: We use a synthetic control method to create a synthetic South Africa, as a weighted average of countries (the 'donor pool') that are similar to South Africa, but that did not engage in large-scale tobacco control measures between 1990 and 2004. RESULTS: Per capita cigarette consumption would not have continued declining in the absence of the tax-led measures that began in 1994. By 2004, per capita cigarette consumption was 36% lower than it would have been in the absence of the tax-led measures. These results, which we mostly attribute to tax increases, are robust to different specifications of the 'donor pool'. CONCLUSIONS: Significant public health dividends can be obtained by consistently increasing the real tax on cigarettes.

How effective has tobacco tax increase been in the Gambia? A case study of tobacco control.

OBJECTIVES: The objective of the present study was to evaluate how effective tobacco tax increase has been in increasing price of tobacco products and reducing tobacco consumption in the Gambia. In addition, it tests the hypothesis that tobacco tax revenue grows while tobacco consumption decreases as a result of tax and price increase. SETTING: The study is designed at the macroeconomic level to examine the import of tobacco products and revenue collected from tobacco taxation in a low-income setting. PARTICIPANTS: The participants of this study are the government officials employed in the Ministry of Finance and Economic Affairs (MoFEA), the Gambia and the Gambia Revenue Authority, who are in charge of planning and implementing the tobacco tax policy in the Gambia. INTERVENTIONS: The study includes 2 consecutive interventions in tobacco tax policy in the Gambia. The first intervention was moving the tax base for the uniform specific excise tax on cigarettes from weight to pack of cigarettes in 2013. The second intervention involved increasing the excise and the environmental tax on tobacco products in 2014. PRIMARY AND SECONDARY OUTCOME MEASURES: The primary outcome measures were the cost, insurance and freight value and the price of tobacco products. The secondary outcome measures included the import of tobacco products and tobacco tax revenue. RESULTS: In 2013-2014, the Gambia MoFEA raised the specific excise rate, which increased price, reduced consumption and generated significantly more government revenue from tobacco products. This is a clear evidence of the win-win outcome of raising tobacco tax. In addition, the Gambia has set the example of harmonising tax rates between tobacco products that reduces the substitution between tobacco products. CONCLUSIONS: The Gambia presents the best practice in tobacco taxation. There is need for documenting more country-specific evidence on the win-win outcome of raising tobacco tax.

Impact of cigarette price differences across the entire European Union on cross-border purchase of tobacco products among adult cigarette smokers.

BACKGROUND: We investigated the impact of cigarette price differences across the European Union (EU) on cross-border tobacco purchasing because of cheaper price among current cigarette smokers. METHODS: Individual-level tobacco-related data (including cross-border tobacco purchasing behavior) were from the Special Eurobarometer 385 (V.77.1), a cross-sectional survey of persons aged ≥15 years from 27 EU Member States during 2012. Country-specific weighted average prices (WAP) per 1000 cigarettes (as of 1 July 2012) were obtained from the European Commission, and divided by 50 to yield WAP per cigarette pack. The dispersion in EU cigarette prices was measured with the coefficient of variation. Multivariate logistic regression was applied to measure the relationship between EU-wide cigarette price differential and cross-border tobacco purchasing because of cheaper price among current cigarette smokers (n=6896). RESULTS: The coefficient of variation for cigarette WAP within the EU was 0.39 (mean price=€3.99/pack). Of all current cigarette smokers in the EU, 26.2% (27.5 million persons) engaged in a cross-border tobacco purchase within the past 12 months, of which 56.3% did so because of cheaper price in another country. EU-wide cigarette price differential was significantly associated with making a cross-border tobacco purchase because of cheaper price (adjusted OR=1.34; 95% CI 1.22 to 1.47). CONCLUSIONS: Reducing differences in cigarette tax and price within the EU, coupled with a stricter limitation on the quantity of cigarettes that it is possible to carry from one Member State to another, may help reduce cross-border tax avoidance strategies.

Taxes on tobacco, alcohol and sugar sweetened beverages: Linkages and lessons learned.

Increased consumption of sugar-sweetened beverages (SSBs) has been linked to increases in obesity in both high-income and low- and middle-income countries. Tobacco and alcohol taxes have proven to be effective tools to reduce tobacco and alcohol use. Many public health advocates propose using similar taxes to reduce consumption of SSBs. South Africa is a middle-income country that is considered a leader in the area of tobacco tax policy. A case study of tobacco and alcohol taxes is used to better understand optimal tax structures for SSBs. The case study tracks aggregate data over time on taxes, prices, consumption, tax revenues, and marketing expenditures at the brand level. Tobacco and alcohol taxes are shown to be effective in reducing the demand for tobacco. Additionally, taxes on the dose of alcohol rather than the volume of the beverage may incentivize producers to reduce the volume of alcohol in beverages through the supply side. While specific taxes based on the volume of beverages are likely to reduce the demand for SSBs, policy makers should also consider taxes on alcohol and SSBs that tax the dose of the alcohol and calories in order to create supply-side incentives for producers to lower alcohol and calorie levels in existing products or promote products with lower levels of alcohol and calories.

The rewards, risks and challenges of regional tobacco tax harmonisation.

Combining international relations theory and a technical discussion of tobacco taxation, we examine prospects for regional tobacco tax harmonization and how it might heighten the positive effects of taxation for public health. The specific rewards of harmonized tobacco taxation that follow "best practices" might reasonably include increased tax revenue, higher prices for tobacco products and related decreases in tobacco consumption and/or smoking prevalence. Harmonization, however, is often politically and technically challenging as each region has political and economic idiosyncrasies that create multiple, and often conflicting constraints on tax harmonization. For example, governments must overcome different types of collective action problems to agree politically on harmonized policy. Though there is no "one size fits all" approach, we find that setting appropriate and realistic goals and developing reasonable expectations are important for success.

Market structures, socioeconomics, and tobacco usage patterns in Madagascar.

INTRODUCTION: The isolated island nation of Madagascar has substantial prevalence of both smoking and smokeless tobacco use, although not of dual use. Madagascar's tobacco market, much like its historical and cultural underpinnings, appears to have both Asian and African influences. Additionally, it has a unique market structure that plays an important role in influencing patterns of tobacco use. This study analyzes the determinants of smoking and smokeless tobacco use in Madagascar. METHODS: We used the 2008 Madagascar Demographic and Health Survey to analyze both smoking tobacco and smokeless tobacco use, stratified by gender. Multivariate log binomial models were used to evaluate the relationship between tobacco use and age, residence (urban/rural), province, marital status, and education. RESULTS: Our analysis indicates that two distinctly different groups of people use two distinctly different tobacco products. Smoking is almost exclusively used by men and does not appear to be related to socioeconomic status. Conversely, smokeless tobacco is consumed by large proportions of both men and women, who are less educated and live in rural areas of the country. This disparate pattern in consumption is a reflection of the different market structures for smokeless tobacco (a cottage industry) and smoking tobacco (a near monopoly). CONCLUSIONS: Distinct market-based, geographic, and socioeconomic disparities in tobacco use are explored in order to begin the classification of Madagascar's tobacco epidemic as more African, more Asian, or as a distinctly different environment.

Cigarette affordability in the United States.

INTRODUCTION: Cigarette excise tax and price increases reduce smoking consumption and prevalence. Studies have previously defined cigarette affordability internationally and have discussed its relevance as a tobacco control policy measure. This study provides the first estimates on cigarette affordability in the United States. METHODS: Cigarette affordability was defined as cigarette price in relation to individuals' income level. Three measures of cigarette affordability were estimated for U.S. states and nationally between 1970 and 2010. RESULTS: In 2010, on average, it took 1.62% of an individual's annual personal disposable income to purchase 100 packs of cigarettes in a U.S. state (relative income price). An individual who earned the equivalent of the hourly median wage in a U.S. state needed to work 21.4min in an hour to purchase a pack of cigarettes (minutes of labor, MoL50), whereas a relatively poorer individual earning the hourly 25th percentile wage needed to work 32.7min (MoL25). Cigarettes were most affordable in parts of the South and West and were least affordable in Northeastern states. While cigarette prices increased significantly between 1970 and 2008, affordability remained unchanged during this time and cigarettes may have become more affordable since the early 2000s in many states. CONCLUSIONS: Cigarette affordability in 2010 varied widely across U.S. states, a result of cigarette price increases not keeping pace with income increases in some parts of the United States, especially in Southern and Western states. In order to maximize the public health gains from cigarette tax increases, state taxation policies may consider affordability in benchmarking excise tax increases.

Price and tax measures and illicit trade in the framework convention on tobacco control: what we know and what research is required.

INTRODUCTION: Article 6 of the Framework Convention on Tobacco Control commits Parties to use tax and price policies to reduce tobacco use, whereas Article 15 commits Parties to implement measures to eliminate the illicit trade in tobacco products. This paper identifies research gaps/needs, especially in low- and middle-income countries, which, if adequately addressed, would help in implementing Articles 6 and 15. METHODS: Based on a recent comprehensive review on the impact of tax and price on tobacco consumption and a summary of reviews and narratives about the illicit tobacco market, research gaps are identified. RESULTS: Countries have highly diverse research needs, depending on the stage of the tobacco epidemic, previous research and data availability, and making a ranking of research needs infeasible. Broad issues for further research are the following: (1) monitoring tobacco consumption, prices, and taxes, (2) assessing the effectiveness of the tax structure in generating revenue and reducing tobacco use, (3) strengthening the tax administration system in order to reduce tax evasion and tax avoidance, (4) improving our understanding of the political economy of tobacco tax policy, and (5) employing a multidisciplinary approach to assessing the magnitude of illicit tobacco trade. CONCLUSIONS: At a technical level, the case for increasing excise taxes to improve public health and increase government revenue is easily made, but the political and policy environment is often not supportive. In order to effectively impact policy, the required approach would typically make use of rigorous economic techniques, and be cognizant of the political economy of raising excise taxes.

Cigarette affordability in Europe.

OBJECTIVE: To analyze trends in excise taxes, real price and the affordability of cigarettes in Europe, and to examine the impact of EU wide tax policies on new member states. DESIGN: We use a sample of 37 European countries with data from 2004 to 2010. 27 countries are EU member states of which 12 joined in 2004 or 2007 (new members), while 10 non-EU countries are included as a comparison. Data is sourced from the European Commission and the Economist Intelligence Unit. RESULTS: The excise tax burden increased in all new member states between 2004 and 2010 while remaining relatively unchanged in existing member states. In 2010, the excise tax burden was higher in new (mean 63.8%) than in existing member states (mean 59.4%). Although cigarettes were significant cheaper in new member states the difference in affordability was narrower between the two groups. Excise taxes and prices rose aggressively in new member states while the increases in existing member states were smaller. While cigarettes became less affordable in most EU member states there was little difference between new and existing member states. The average annual percentage change in per-capita cigarette consumption was negative in all existing member states and in 9 of 12 new member states between 2004 and 2010, indicating declining per-capita cigarette consumption. CONCLUSIONS: Joining the EU results in significant increases in excise taxes and prices, and declines in affordability. Additionally, the structure of taxes, specifically the high excise tax floor resulted in higher taxes and prices.

Tobacco expenditures and its implications for household resource allocation in Cambodia.

OBJECTIVES: To assess the determinants of smoking behaviour and to estimate the impact of tobacco consumption on the consumption of other commodities by Cambodian households. METHODS: To assess the determinants of smoking in Cambodia, the authors used a logistic regression model that estimated the probability of an individual smoking, given a set of socioeconomic and demographic characteristics. A Seemingly Unrelated Regression method was used to assess the impact of tobacco consumption on the consumption of other commodities. The nationally representative 2004 Cambodia Socio-Economic Survey, collected by the National Institute of Statistics of the Ministry of Planning in Cambodia, was used for the analysis. RESULTS: Smoking in Cambodia is influenced by a variety of factors such as gender, marital status, age, ethnicity, literacy, health status and perceptions about the health consequences of tobacco use. The authors found that spending on tobacco crowds out expenditures on education and clothing at the national level and expenditures on food for low- and middle-income households. CONCLUSIONS: The first analysis of the study showed that increased education is associated with lower daily smoking, and the second analysis revealed that expenditures on tobacco crowds out expenditures on education. Combining these two results points to a vicious circle where low education means higher likelihood of smoking, which in turn results in lower spending on education. Such budget allocation clearly has negative intergenerational consequences.

Opportunities and risks of the proposed FCTC protocol on illicit trade.

Illicit trade in tobacco products presents a threat to public health because it undermines the use of tax and price policies, which are among the most effective mechanisms for reducing tobacco consumption. Parties to the WHO Framework Convention on Tobacco Control (FCTC) are in the final stages of negotiating a protocol aimed at strengthening international cooperation in the fight against illicit tobacco trade. While an effective multilateral response to illicit tobacco trade would make a significant contribution to global tobacco control, achieving this through the FCTC forum is challenging. First, while illicit tobacco trade is a health problem, the expertise, experience and capacity needed to combat illicit trade are not traditionally found in health agencies. The development of links with other agencies, both domestic and international, is critical to ensure both an effective response and an efficient use of limited governmental and non-governmental resources. Second, in many parts of the world, the tobacco industry cooperates closely with governments in the combating of illicit trade. This cooperation poses risks for tobacco control, particularly if relationships and norms of cooperation spill over into other areas of FCTC implementation. An examination of the industry's positioning suggests that it sees an opportunity to portray itself as 'legitimate' and 'responsible', a friend of governments, and a way to integrate itself into FCTC processes. This paper makes suggestions for moving forward in this challenging area towards ensuring that the approach taken actually reduces illicit tobacco trade, strengthens tobacco tax policies and does not operate to undermine the FCTC.