Tobacco Taxation in Spain: A tax laggard with a brighter possible future.

INTRODUCTION: In recent years tobacco taxation in Spain has regressed, with its Tobacconomics tax scorecard falling from 3.9 points (out of 5) in 2014, to only 2.625 in 2020. The objective of this research is to provide a detailed analysis of the causes behind this deterioration and identify possible ways forward for reversing this trend. METHODS: A retrospective 2014-2022 analysis of manufactured cigarettes (FM) and roll-your-own tobacco (RYO) markets including tax structure/rates, affordability, retail price gaps across products, and price differentials with bordering countries. A market level simulation model to 2028 studied the impact of various tax policy scenarios on smoking prevalence, premature deaths averted, smoking intensity, product substitution, government revenue, sales, and industry profit. RESULTS: A lack of tax increases in a context of inflation and income growth during the past 8 years means FM and RYO have become 13% more affordable, with a constant differential of €2 between 20 FM and RYO sticks, and the price gap between Spain and neighbouring France increased. Modelling of two realistic reform scenarios that reduce/eliminate the price gap between FM and RYO suggest substantial increases in government revenues and up to 700,000 fewer smokers and 210,000 fewer premature deaths. CONCLUSIONS: Current European Union legislation on tobacco taxes leaves ample room for much needed tobacco tax reform. For the sake of both public health and the economy, Spain should increase its Minimum Excise Tax. This would not only save lives, but also bring much needed revenue for the government. IMPLICATIONS: The stance of Spain on tobacco taxes has deteriorated recently. This study argues that the failure of successive governments to raise minimum taxes in an inflationary context has made tobacco products more affordable, and quantifies the improvements in smoking prevalence and excise revenue that would accrue if the authorities act urgently increasing rates within realistic limits.Spain is representative of European countries where government inaction has rendered minimum tobacco taxes obsolete. Given the postponement of the revision of the European Union Tobacco Tax Directive, this study highlights the need to act unilaterally within the existing legal framework.

Improving estimates of the illicit cigarette trade through collaboration: lessons from two studies of Malaysia.

This paper critically analyses contrasting estimates of Malaysia's illicit cigarette trade in 2011, 2015 and 2019 by Bui et al and Koya et al who previously produced independent estimates at about the same time using tax gap analysis. Collaboration between the two authors' teams emerged due to the discrepancies in their results, generating this paper to explore the methodological issues identified and hence produce revised estimates of the rate of illicit. Key issues identified were: Bui et al's assessment of legally imported cigarettes impacting all years; their exclusion of ad valorem duty affecting the 2011 and 2015 estimates; Koya et al overlooked the value of cigarettes for export market in their ad valorem calculation and used the sales value of imported tobacco/tobacco products, not just cigarettes, both of which impact estimates for 2011 and 2015. Recalculations using Koya et al's consumption data reveal that in 2019, illicit cigarettes accounted for about 70% of the market, which is higher than Bui et al's estimate (38%) but slightly lower than Koya et al's (72%). For 2011 and 2015 where ad valorem applied, the corrected estimates show a share of the illicit cigarette market of approximately 41.1% and 52.7%, respectively, differing from Bui et al's 0% in 2011 and 29.6% in 2015, and Koya et al's 51% in 2011 and 55% in 2015. This paper provides essential lessons for addressing methodological issues between authors' teams and updated estimates of Malaysia's illicit cigarette trade, verifying that Malaysia faces a substantial illicit cigarette trade problem.

Estimating the Size of Illicit Tobacco Market in Lithuania: Results from the Discarded Pack Collection Method.

INTRODUCTION: For decades in Lithuania, the threat of illicit trade has been used to weaken evidence-based tobacco-control policies and to undermine efforts to reduce smoking prevalence and its attributable burden, while also depriving the government of much-needed tax revenue. The aim of this study is to estimate the size of the illicit cigarette market in Lithuania using data from a nationally representative discarded pack collection. AIMS AND METHODS: The study employed a two-stage cluster design by first randomly selecting 65 well-defined population settlements (30 cities and 35 townships), representing both urban and rural areas, in all 10 counties in Lithuania. Next, we randomly selected 358 polling districts within these settlements. Each polling district had one route along which discarded packs were collected between September 2019 and 2020. RESULTS: In total, 28.9% (95% CIs = 27.7 to 30.1) of discarded cigarette packs were classified as illicit. The vast majority (90.1%) of illicit packs originated from Belarus with most (86.9%) packs produced in the Grodno Tobacco Factory Neman. Tax stamps were present on 93.6% of legal packs and also on 76% of illegal packs. CONCLUSIONS: Data from this study suggest that the illicit cigarette trade in Lithuania is more widespread than indicated by other methods and primarily supplied by the neighboring Belarus state-owned tobacco factory in Grodno. This signals the need to adopt Belarus-specific border control and security measures. IMPLICATIONS: This study presents data from the first national industry-independent study on illicit tobacco trade in Lithuania using discarded cigarette pack collection method. As customs seizure data show, our results also indicate that the illicit cigarette market is primarily supplied by Belarus state-owned Grodno Tobacco Factory Neman known for filling Europe with cheap cigarettes. An estimate derived from this study is higher than both the industry-independent estimate obtained by the survey method and the estimates offered by the tobacco industry. This adds to the evidence that the difference in estimates obtained by different methods reflects the strengths and weaknesses of each. The study also demonstrates the impact of a rogue neighbor on the illicit market in an adjacent country and offers suggestions on how to address it.

Tobacco industry compliance with the EU track and tracing system in Lithuania.

BACKGROUND: The European Union (EU)-wide tobacco tracking and tracing system (T&T system) became operational on 20 May 2019, allowing a transitional period and gradual installation of the system until May 2020. This study attempts to assess the EU T&T system using a sample of discarded cigarette packs collected in Lithuania. METHODS: The empty pack survey was conducted between September 2019 and September 2020, covering both the transitional period and the period of full implementation. The study employed a two-stage cluster design by first randomly selecting 65 well-defined population clusters (30 cities and 35 towns) representing both urban and rural areas in all 10 counties in Lithuania. Second, we randomly selected 358 polling districts (routes) in each cluster. RESULTS: The fieldworkers walked at least 1074 km and collected 5727 discarded empty cigarette packs. None of the packs found during the EU T&T transitional period had a unique identifier (UI). After the full implementation of the EU T&T system, 32.0% of the collected packs were still without a UI. 5.8% of licit packs were without a UI after the May 2020 deadline. Most of the legal non-compliant packs (131, or 69.7%) were intended for the Lithuanian market. Close to 85% of packs that had duty-free markings were non-compliant. CONCLUSION: The tobacco industry most likely disregarded the EU T&T transitional period as no packs with UIs were found up until the full implementation. Packs without UIs were still found 4 months after the full implementation of the EU T&T system.

An overlooked market: loose cigarettes, informal vendors and their implications for tobacco taxation.

OBJECTIVE: To examine the features of markets for loose cigarettes in several low-income and middle-income countries and their effects on tobacco control policies, particularly taxation. DESIGN: An analysis of survey data targeting people who smoke in two African, one Southeast Asian and two South Asian countries and retailers across 16 African countries to study loose cigarette markets and examine how prices in these markets move relative to the prices for cigarette packs. RESULTS: Markets for loose cigarettes are large, and their consumer base tends to differ from the wider population of people who smoke. Loose cigarette prices are on average higher than those of cigarettes bought in packs, and they respond differently to tax increases, at least partially due to a denomination effect. CONCLUSIONS: The features of the loose cigarette markets present a challenge for tobacco control policy, especially tobacco tax policy. One way to overcome this challenge is to aim for large, rather than incremental, tax increases.

Response of legal and illegal cigarette prices to a tax increase in Ethiopia.

BACKGROUND: In 2020, Ethiopia passed a landmark tax proclamation implementing an evidence-based mixed excise system aimed at curbing tobacco use. This study evaluates the impact of the tax increase of more than 600% on both legal and illegal cigarette prices in order to gauge the impact of the tax reform in the presence of a sizeable illicit cigarette market. METHODS: Data on 1774 cigarette prices were obtained from retailers during Empty Cigarette Pack Surveys in the capital and major regional cities conducted in 2018 and 2022. Packs were categorised as 'legal' or 'illicit' using criteria from the tobacco control directives. Descriptive and regression analyses were used to study the cigarette price changes during the period of 2018-2022, capturing the impact of the 2020 tax increase. RESULT: Prices of both legal and illegal cigarettes increased in response to the tax increase. In 2018, the stick prices ranged from ETB0.88 (Ethiopian birr) to ETB5.00 for legal cigarettes while they ranged from ETB0.75 to ETB3.25 for illegal ones. In 2022, a legal stick sold for ETB01.50-ETB2.73 and an illegal stick for ETB1.92-ETB8.00. The average real price of legal and illegal brands increased by 18% and 37%, respectively. The multivariate analysis confirms that prices of illicit cigarettes grew faster compared with the legal ones. By 2022, illicit brands were on average more expensive compared with their legal counterparts. This result is statistically significant at p<0.01. CONCLUSION: The prices of both legal and illegal cigarettes increased following the 2020 tax increase, with the average real cigarette price increasing by 24%. As a result, the tax increase likely had a positive impact on public health despite a sizeable illicit cigarette market.

Analysis of the illicit tobacco market in Georgia in response to fiscal and non-fiscal tobacco control measures.

BACKGROUND: Georgian illicit cigarette consumption was 1.5% in 2017. In 2018, a new tobacco control law took effect followed by a substantial cigarette excise tax increase in 2019. Research shows these policies reduce tobacco consumption, but the tobacco industry argues they increase illicit trade. There is limited evidence on this, particularly from developing countries. METHODS: A panel household survey in Georgia obtained data over three waves: 2017 baseline, 2018 after the tobacco control law took effect and 2019 after taxes increased. A sample of 1578 smokers (and quitters in later waves) from five regions reported their tobacco use and were asked to present a cigarette pack in their possession. These were examined for tax stamps and health warnings to establish legality. FINDINGS: There was no evidence of an increase in illicit cigarette consumption in Tbilisi, Kutaisi, Akhaltsikhe or Gori in any wave. In Zugdidi, near the Russian-occupied Abkhazia, illicit cigarette consumption was increasing even prior to the tax increase, reaching 30.9% by wave 3. A country-wide shift occurred from manufactured cigarettes to roll-your-own tobacco (whose tax remained unchanged) between waves 2 and 3. CONCLUSION: No evidence of a country-wide increase in illicit cigarette trade was found after non-fiscal tobacco measures took effect and cigarette taxes increased. Relatively high illicit cigarette consumption in Zugdidi highlights the role of disputed territories and border administration in illicit cigarette supply. Substitution towards roll-your-own tobacco after manufactured cigarette taxes increased demonstrates the importance of equalising taxes on tobacco products to maximise public health benefits.

Smoking prevention that increases tax revenue: tobacco taxes in the Czech Republic 2004-2020.

OBJECTIVES: Increasing tobacco excise tax is one of the most effective smoking-prevention tools. The aim of the study is to assess the use of this tool in the Czech Republic (CR) by studying trends in cigarette taxes, prices, tax revenue, and the affordability of cigarettes in the CR. METHODS: Data on cigarette consumption, their tax rates, price, and tax revenue in the CR for 2004-2020 come from multiple sources. We used the consumer price index to convert nominal values to real values. Given an average daily consumption of 12.7 cigarettes per smoker, the affordability of cigarettes was measured as a percentage of the average monthly wage needed to buy 19 cigarette packs. RESULTS: Despite recent increases in excise taxes, cigarettes in the CR are becoming more affordable. We found that the affordability of cigarettes was greater in 2020 than in 2008. The values of both the specific and the minimum excise taxes are currently being eroded by inflation. Cigarette consumption has declined from 2015 to 2020, and the government still received a bit more excise tax revenue due to its earlier tax policy. However, if taxes are not increased further, the revenue will start to decline. CONCLUSIONS: Despite the trend of increasing tobacco taxes in the CR, both the affordability of cigarettes and their use are still high in the country. This means that the CR is not using tax policy effectively enough to reduce smoking prevalence. It needs a substantial and sudden tax increase, in addition to the currently planned tax increases, to reduce smoking prevalence and lower the burden of tobacco use in the economy. Such a move would not only improve public health in the CR, but also increase government revenue.

Is Illicit Cigarette Market a Threat to Tobacco Control in Ethiopia?

INTRODUCTION: The presence of an illicit cigarette trade is used as an argument in Ethiopia to halt pro-health tobacco tax policies. The National Tobacco Enterprise (NTE) recently reported that the illicit cigarette market accounts for over 61% of the total market, and over 90% in the Eastern part of Ethiopia. AIMS AND METHODS: The aim of the study is to estimate the magnitude of the illicit cigarette trade in Ethiopia. We employed a cross-sectional observational study of empty packs collected in Ethiopia from retailers and from the streets in 10 towns, representing 10 regional states, and two autonomous cities. RESULTS: The majority (80.1%) of the 6438 empty cigarette packs collected (5368 from the streets and 1070 from retailers) belonged to locally produced brands, while the remaining 19.9% were foreign packs, including those allowed to trade in Ethiopia. Overall, 18.9% of the collected empty packs were classified as illicit. However, the share of illicit cigarette packs varied considerably across the country with as many as 97.7% of the packs collected near the Eastern border being illicit. Since the smoking prevalence is significantly higher in that part of Ethiopia, the weighted estimate of illicit cigarette market reached 45.4%. CONCLUSIONS: To address this alarming situation, Ethiopia should adopt technologies such as a track and trace system to control its cigarette supply chain, because cigarette packs currently bear no indication that the proper tax was paid. In addition, law enforcement and border security need to be strengthened, especially in the East. IMPLICATIONS: This is the first study to estimate the magnitude of the illicit cigarette trade in Ethiopia. It shows that the illicit cigarette trade is low in most parts of the country, but points to some problematic areas near the border with Somalia where illicit cigarette prevalence and overall smoking prevalence are high. We propose a solution to control illicit cigarette trade in Ethiopia that the whole region would benefit from.

Measuring the illicit cigarette market in the absence of pack security features: a case study of South Africa.

There are several ways to measure the illicit cigarette market. In South Africa, different methods were used to triangulate results. The aim of this paper is to assist researchers to decide which method is most suitable to their context, especially for countries that do not have security features on cigarette packs (eg, tax stamps). We analysed the methods and results from three published articles that used various approaches to measure cigarette illicit trade in South Africa: (1) gap analysis, (2) price threshold method using secondary data from a national survey, and (3) price threshold method using primary data collected in low socioeconomic areas. We provide methodological insights and background information. We discuss the advantages and disadvantages of each method. The method chosen by researchers will depend on data availability, the existence or absence of security features on cigarette packs and funding. Researchers investigating illicit trade should use more than one method to increase confidence in the obtained results.

Magnitude of illicit cigarette trade in Malaysia: empirical evidence compared with industry studies.

BACKGROUND: The tobacco industry contends that the illicit market in Malaysia occupies 62.3% of the total cigarette market. If this is true, Malaysia has one of the largest shares of illicit cigarettes in the world. METHODS: This study employs a rigorous gap analysis to measure the size of the illicit cigarette trade in Malaysia and compare it with the industry estimates. FINDINGS: We found that in 2019, the illicit cigarette market share ranged from 38.2% to 52.5%, depending on assumptions with respect to consumption under-reporting, which is substantially less than the industry estimates. We found that the size of the illicit cigarette market was not driven by higher excise tax: doubling the excise tax rate from RM0.20 to RM0.40 per stick in November 2015 resulted in only a slight increase in the illicit cigarette market share and no increase in the number of illicit cigarettes in the market. CONCLUSIONS: Therefore, a reduction in cigarette excise taxes, as suggested by the industry, will not solve the problem of illicit cigarette trade in Malaysia. Instead, the government should ratify the Framework Convention on Tobacco Control's Protocol to Eliminate Illicit Trade in Tobacco Products and implement the strategies outlined in the protocol.

Analysing the trend of illicit tobacco in the Philippines from 1998 to 2018.

Tobacco taxation is the most effective measure to reduce cigarette consumption and consequently improve public health outcomes. It is also an important source of government revenue. The presence of an illicit tobacco market diminishes the public health and fiscal gains of cigarette levies by making cheaper non-taxed cigarettes available. To date, the research on the extent of illicit tobacco trade in the Philippines, despite its potential to inform policies for controlling the supply of illicit cigarettes, has been limited. This study provides an estimate of the size of the illicit tobacco market in the Philippines from 1998 to 2018. It employs gap analysis comparing an estimate of the survey-based adult cigarette consumption with legally sold cigarettes in the Philippines. The illicit trade estimates are contrasted with the evolution of tax changes. The results show that the illicit cigarette market share dropped by 42% from 2003 to 2008 and by an additional 79% from 2008 to 2013. In spite of the large tax increases by the Philippine government through the Sin Tax Law starting from 2013 until 2018, the illicit share in 2018 remains similar to its 1998 level of 16% of the total market. Hence, our study finds no evidence of a positive relationship between tobacco taxes and size of illicit cigarette market in the Philippines.

How much to pay for a track and trace system: a simulation model for South Africa.

BACKGROUND: The illicit trade in tobacco reduces the effectiveness of tobacco-control policies. Independent track and trace (T&T) systems are considered one of the most effective measures available to reduce the illicit tobacco trade. South Africa, with an illicit trade estimated at over 35% of the total market, is yet to implement a T&T system. METHODS: An Excel-based simulation model is used to determine the break-even T&T marker cost per pack. At the break-even cost per pack, the government would recover all costs associated with implementing T&T by collecting additional revenues. We conduct a scenario analysis to provide a range of break-even marker costs. FINDINGS: A marker cost of between R2.68 (US$0.17) and R5.24 (US$0.34) per pack allows the South African government to collect enough additional revenue to recover all costs associated with T&T. Implementing such a system would reduce cigarette consumption by between 5% and 11.5%. Given that comparable systems cost significantly less than this range (roughly US$0.02 per pack), the government would in all likelihood be able to implement a system at a cost below the break-even rate, thus generating additional revenue. CONCLUSION: The break-even simulation model provides a practical tool for the government to plan the implementation of T&T and to set up an evaluation criteria for the T&T tender process. The simulations illustrate that implementing T&T in South Africa would both reduce consumption (licit and illicit) and generate additional revenue. With some modifications, the model can be applied to other countries as well.

Illicit cigarette trade in the cities of Pakistan: comparing findings between the consumer and waste recycle store surveys.

BACKGROUND: Concerns about the magnitude of illicit cigarette trade have prevented the Government of Pakistan from increasing tobacco taxes. We estimated the proportion of illicit cigarettes sold in Pakistani cities. Moreover, we compared two methods for collecting cigarette packs and investigated if the illicit cigarette trade equates to tax evasion. METHOD: We analysed cigarette packs collected from 10 cities of Pakistan using two methods: consumer survey based on a two-stage random sampling strategy to recruit adult smokers and photograph their cigarette packs and waste recycle store survey to purchase used cigarette packs. Cigarettes were considered illicit if any one of the following was absent from their packs: text and pictorial health warning, underage sale prohibition warning, retail price and manufacturer's name. From the consumer survey, we also estimated the proportion of smokers who purchased loose cigarettes (illegal) and packs below the minimum retail price. Taxation officers (n=4) were consulted to assess their level of confidence in judging tax evasion using the above criteria. RESULTS: Out of 2416 cigarette packs in the consumer survey, 454 (17.8%; 95% CI 15.4% to 20.2%) were illicit. Similarly, out of 6213 packs from waste recycle shops, 1046 (16.8%; 95% CI 15.9% to 17.7%) were illicit; the difference was not statistically significant (p=0.473). Among consumers, 29.5% bought loose cigarettes and 13.8% paid less than the minimum retail price. The taxation officers considered the manufacturer's name and retail price on cigarette packs as the most relevant criteria to detect tax evasion. CONCLUSIONS: One in six cigarette packs consumed in Pakistan could be illicit. These figures are far less than those propagated by the tobacco industry. Collecting packs from waste recycle stores is an efficient and valid method to estimate illicit cigarette trade.

The Economic Cost of Smoking in South Africa, 2016.

INTRODUCTION: Chronic, noncommunicable diseases are on the rise globally, with tobacco consumption being an important contributing risk factor. These increases result in significant economic costs due to increased healthcare costs, productive lives lost, and productive days lost due to illness. Estimates of these economic costs are scarce in low- and middle-income countries. METHODS: Drawing on a diverse range of data sources, direct healthcare costs, and productivity losses due to illness and premature deaths were estimated using the cost-of-illness approach. The present value of lifetime earnings was used to estimate productivity losses from premature deaths. RESULTS: We estimate that 25 708 deaths among persons aged 35-74 in 2016 are smoking-attributable. The economic cost of smoking was R42 billion (US$2.88 billion), of which R14.48 billion was for healthcare costs (hospitalization and outpatient department visits). The economic cost of smoking amounted to 0.97% of the South African GDP in 2016, while the healthcare cost of smoking-related diseases was 4.1% of total South African health expenditure. The costs are lower for women because of their lower smoking prevalence. CONCLUSION: The economic burden of smoking calls for a further scaling-up of tobacco-control interventions in South Africa. IMPLICATIONS: This article addresses the paucity of research on the detailed economic costs of smoking in low-and middle-income countries, including South Africa. Our calculations, based on an extensive range of recent data, provide the most detailed estimate to date and include quantification of the direct and indirect costs of smoking in South Africa. We found that the magnitude of the costs related to smoking in South Africa is larger than in the previous estimates and that for every Rand received in the form of cigarette tax, society loses 3.43 Rands. This article provides an economic case for evidence-based tobacco control in South Africa.

Consumption of legal and illegal cigarettes in the Gambia.

BACKGROUND: The prevalence of cigarette smoking in the Gambia is relatively high, compared with most African countries. Little is known about the characteristics of the smokers and their habits, particularly with regard to tobacco tax avoidance and tax evasion. METHODS: A nationally representative survey of 1211 smokers conducted in November/December 2017 employed a three-stage stratified sampling method and resulted in 1205 complete observations. The sociodemographic characteristics and smoking behaviours were analysed, including smoking intensity and brand preferences. Information on the physical features of cigarette packs that smokers had, observed by enumerators, and self-reported cigarette prices were used to estimate the proportion of illegal cigarettes on the market. FINDINGS: As in many African countries, most smokers were male, between the ages of 25 and 54 years living primarily in urban areas. The three most popular cigarette brands are Piccadilly, Royal Business and Bond Street, which account for over three-quarters of all cigarette purchases. Price information suggests that about 7.3% of smokers purchased an illicit cigarette at their last purchase. When smoking intensity was taken into account, 8.6% of the total cigarette market was estimated to be illicit. Using an alternative method of evaluating pack's features revealed that only 0.9% of last purchases were illicit. CONCLUSION: Despite recent excise tobacco tax increases, the use of illicit cigarettes in the Gambia is low and does not represent a significant obstacle to reaching both the public health and fiscal goals of higher tobacco taxes.

Illicit cigarette trade in South Africa: 2002-2017.

BACKGROUND: Increasing cigarette excise taxes is widely recognised as the most effective measure to reduce the demand for cigarettes. The presence of illicit trade undermines the effectiveness of tax increases as both a public health and a fiscal measure, because it introduces cheaper alternatives to legal, full-priced cigarettes. OBJECTIVE: To assess trends in the size of the illicit cigarette market in South Africa from 2002 to 2017 using gap analysis. METHODS: Tax-paid cigarette sales are compared with consumption estimates from two nationally representative surveys: the All Media and Products Survey and the National Income Dynamics Study. We explore the size of the illicit cigarette market and its changes over the period 2002-2017. RESULTS: Since 2009, illicit trade has increased sharply. We estimate that illicit trade is between 30% and 35% of the total market in 2017. The acceleration in the growth of the illicit market since 2015 corresponds with a turbulent time at the South African Revenue Service, when many of the enforcement functions were greatly reduced. CONCLUSIONS: The current levels of illicit trade are extremely high and need to be addressed urgently by implementing effective control mechanisms such as a track and trace system to monitor the production, taxation, and sale of cigarettes.

The illicit cigarette market in six South African townships.

BACKGROUND: We estimate the size of the illicit cigarette market in low socioeconomic areas in South Africa before and after a tax increase. In 2018, the real excise tax increased by 3% and the value-added tax (VAT) rate increased from 14% to 15%. Thus, the real tax on cigarettes increased by 4%. METHODS: A total of 2427 smokers were interviewed over two rounds of data collection (1234 before the tax increase and 1193 after). Data were collected in six townships across four of South Africa's nine provinces. Smokers were asked about their most recent cigarette purchase. Cigarettes purchased for R1 (US$0.08) or less per stick are presumed illicit, based on a threshold price, which includes production costs and taxes. RESULTS: In 2017 and 2018 respectively, 34.6% and 36.4% of smokers in the sample purchased illicit cigarettes. The increase in the proportion of illicit purchases was not statistically significant. Smokers with relatively low socioeconomic status, those who have low levels of education and those who are older or unemployed are most likely to purchase illicit cigarettes. CONCLUSIONS: The illicit cigarette trade in South African townships is widespread. The government should implement an independent track and trace system to curb tax evasion. This would reduce the availability of illicit cigarettes, improve public health and increase excise tax collection.

Illicit tobacco trade in Georgia: prevalence and perceptions.

BACKGROUND: In lower-income and middle-income countries, limited research exists on illicit tobacco trade and its responsiveness to taxation. Tobacco taxes are critical in reducing tobacco consumption, thereby improving public health. However, the tobacco industry claims that tax increases will increase illicit tobacco trade. Therefore, research evidence on the size of the illicit cigarette market is needed in Georgia and other low-income and middle-income countries to inform tobacco tax policies. METHODS: In 2017, a household survey using stratified multistage sampling was conducted in Georgia with 2997 smokers, to assess illicit tobacco consumption. Smokers were asked to show available cigarette packs to the surveyors. These were examined for tax stamps and health warnings which allowed for an assessment of illegal cigarette consumption in Georgia. FINDINGS: The packs shown to surveyors suggest illicit cigarette trade is low (1.5%), although with regional differences, as illicit cigarette packs were present in 6% of the households in Zugdidi. Most illicit cigarettes were purchased at kiosks or informal outlets. This estimate might be conservative, as 28% of respondents did not show any packs to the surveyors. CONCLUSIONS: Despite recent tobacco tax increases, illicit cigarette trade in Georgia seems to be negligible. The market is more vulnerable to illicit cigarette trade close to the border with Abkhazia (near Zugdidi). Tighter control or ban of tobacco sales at kiosks and informal outlets may reduce illicit cigarette trade. Further investigation is planned to better understand why a large proportion of survey participants said they had no pack available at home.

Impact of tax increases on illicit cigarette trade in Mongolia.

BACKGROUND: The Mongolian government increased import tobacco tax by 30% in May 2017 and excise tobacco tax by 10% in January 2018. To assess the impact of these tax increases on illicit cigarette trade, we estimate illicit trade before and after tax increases. METHODS: Discarded cigarette packs were collected in the capital city and in two provinces near China, the Russian Federation and Kazakhstan. Tax increases occurred between all three rounds (April 2017, August/September 2017, May/June 2018). Cigarette packs are identified as illicit if there is evidence that tax was not paid. This is deduced from the absence of the Mongolian excise tax stamp, or the absence of traces of a tax stamp (glue residue). Data are weighted to represent the areas sampled. RESULTS: In round 1, 15.4% (95% CI 14.6% to 16.2%) of the 7494 collected packs were illicit. This estimate decreased to 13.6% (95% CI 12.7% to 14.5%) in round 2 (5852 collected packs) and to 6.3% (95% CI 5.7% to 6.9%) in round 3 (6258 collected packs). Illicit cigarettes originated primarily from the Republic of Korea and Ukraine, but some were manufactured in Mongolia. While the majority of illicit products are supplied by global companies (Korea Tobacco & Ginseng, Imperial Tobacco and Philip Morris Kazakhstan), one local company, Mongol Tobacco SO, is also implicated. CONCLUSIONS: The share of illicit cigarettes declined between rounds 1 and 2 despite the import tax increase, and this trend continued in round 3 despite the excise tax increase.