scholarly journals Tobacco excise tax increase and illicit cigarette consumption: evidence from Vietnam

2020 ◽  
Vol 29 (Suppl 4) ◽  
pp. s275-s280
Author(s):  
Anh Nguyen ◽  
Hoang The Nguyen
Keyword(s):  
Tax Policy ◽  
Tax Reform ◽  
Tobacco Industry ◽  
Cigarette Consumption ◽  
Primary Data ◽  
Grocery Stores ◽  
Cigarette Smokers ◽  
Excise Tax ◽  
Illicit Trade ◽  
Tobacco Tax

BackgroundOne of the most significant barriers to tax reform and tax rate increases in Vietnam is the threat of illicit trade promulgated by the tobacco industry. The industry argues that higher taxes will stimulate smuggling, thereby undermining tax policy objectives and impairing the domestic tobacco manufacturing. Unfortunately, there is a dearth of updated and independent studies to verify this claim and inform the tax reform in the country.ObjectivesThe present paper attempts to generate new estimates of the illicit consumption and compare them to a prior study to ascertain the changes in the levels of the illicit trade after a tobacco excise tax increase.MethodsThe study uses primary data collected from the Tobacco Consumption Survey in late 2017. It is a multistage cluster random household survey, covering a sample size of over 2700 smokers, and purposively designed to make its results comparable to prior estimates, which have been done before the tax increase. Particularly, we collect packs from selected smokers and perform careful inspection to identify the prevalence of illicit products. In addition to the consumption, we collect data on brand choices, cigarette prices, the types of stores that the smokers bought their cigarettes, as well as their socioeconomic characteristics. They allow us to determine the regional variation of the illicit trade, identify the main illicit cigarette brands, compare the prices of the licit and illicit cigarettes, and examine the main sources of the illicit cigarettes. Incomes of the licit and illicit cigarette smokers are also compared.ResultsContrary to the tobacco industry’s predictions, our estimates demonstrate that the level of the illicit trade declined even after the increase of taxes imposed on tobacco products in Vietnam. The illicit cigarettes account for only about 13.72% of the total cigarette consumption in Vietnam in 2017, lower than the 20.7% estimate in 2012 done by the previous study. The illicit cigarettes are heavily concentrated in the southern provinces of Vietnam bordering Cambodia, and locally accessible to the smokers from grocery stores. Jet and Hero are the two most popular brands, representing over 80% of total illicit consumption in the country. Interestingly, the illicit cigarettes are on average more expensive than the illicit products in Vietnam, unlike many other countries where the former are typically cheaper than the latter. Consequently, as is to be expected, the illicit cigarette smokers tend to earn higher incomes than those smoking the licit products.ConclusionsRaising the taxes levied on tobacco does not necessarily cause higher illicit consumption in Vietnam as widely stated by the tobacco industry. The Government of Vietnam should recognise the tobacco tax policy as the most effective and cost-effective tobacco control measure and establish a clear road map of progressive tobacco excise tax increases so that total tax levied on tobacco accounts for at least 75% of retail price as suggested by the WHO to reduce smoking prevalence in the country.

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

2021 ◽  
pp. tobaccocontrol-2020-056404
Author(s):  
Megan Little ◽  
Hana Ross ◽  
George Bakhturidze ◽  
Iago Kachkachishvili
Keyword(s):  
Tobacco Control ◽  
Household Survey ◽  
Tobacco Consumption ◽  
Control Measures ◽  
Cigarette Consumption ◽  
Control Law ◽  
Excise Tax ◽  
Cigarette Taxes ◽  
Illicit Trade ◽  
Cigarette Pack

BackgroundGeorgian 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.MethodsA 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.FindingsThere 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.ConclusionNo 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.

The prevalence of illicit cigarette consumption and related factors in Turkey

2017 ◽  
Vol 27 (4) ◽  
pp. 442-447 ◽  
Author(s):  
Bekir Kaplan ◽  
Ana Navas-Acien ◽  
Joanna E Cohen
Keyword(s):  
Cigarette Consumption ◽  
Cross Sectional Survey ◽  
Related Factors ◽  
Cross Sectional ◽  
Cigarette Taxes ◽  
Illicit Trade ◽  
East Region ◽  
Cigarette Pack ◽  
Tobacco Tax ◽  
Cigarette Packs

BackgroundThe tobacco industry claims that high cigarette taxes drive illicit trade and that governments should therefore not increase tobacco tax because it will increase the level of illicit trade. This study examines illicit cigarette consumption in Turkey after a tobacco tax increase and its related factors.MethodThis national cross-sectional survey was conducted in March-June 2013 and 9717 people aged ≥18 years participated in the interviewer-administered survey. Smokers were asked to show their last used cigarette pack to the interviewers and price paid for their cigarettes. Factors associated with smoking cigarettes with a tobacco tax stamp and paying ≥5 TL (Turkish lira) for a pack of cigarettes were analysed with logistic regression.ResultsAmong the observed cigarette packs, 12.1% did not have the Turkish tax stamp. More illicit cigarettes were observed in the East region than in other regions (p<0.001). The reported average amount paid for a pack of cigarettes was €2.12 (€2.15 for men and €1.97 for women, p<0.001). The amount paid for cigarettes with a tax stamp (€2.15) was higher than the amount paid for cigarettes without tax stamp (€1.08) (per cigarette pack) (p<0.001).ConclusionJust over 1 in 10 smokers (12%) had an illicit cigarette pack about 5 months after the final tax increase; this was most common in the East region of Turkey. Estimates are comparable to those in previous studies and do not indicate that an increase occurred in the prevalence of illicit cigarette use compared with before the tobacco tax increase.

scholarly journals Understanding tobacco industry pricing strategy and whether it undermines tobacco tax policy: the example of the UK cigarette market

Addiction ◽  
2013 ◽  
Vol 108 (7) ◽  
pp. 1317-1326 ◽  
Author(s):  
Anna B. Gilmore ◽  
Behrooz Tavakoly ◽  
Gordon Taylor ◽  
Howard Reed
Keyword(s):  
Tax Policy ◽  
Tobacco Industry ◽  
Pricing Strategy ◽  
Tobacco Tax ◽  
The Uk

scholarly journals Impact of tax increases on illicit cigarette trade in Mongolia

2019 ◽  
Vol 29 (Suppl 4) ◽  
pp. s249-s253 ◽  
Author(s):  
Hana Ross ◽  
Nicole Vellios ◽  
Tsetsegsaikhan Batmunkh ◽  
Myadagmaa Enkhtsogt ◽  
Laura Rossouw
Keyword(s):  
Capital City ◽  
Excise Tax ◽  
Illicit Trade ◽  
Tobacco Tax ◽  
Before And After ◽  
Global Companies ◽  
The Republic ◽  
Local Company ◽  
The Impact ◽  
Cigarette Packs

BackgroundThe 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.MethodsDiscarded 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.ResultsIn 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.ConclusionsThe 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.

‘Both Sides of the Argument’? A critical review of existing evidence on the illicit trade in tobacco products in Canada

2019 ◽  
Vol 28 (e2) ◽  
pp. e141-e147
Author(s):  
Julia Smith ◽  
Sheryl Thompson ◽  
Kelley Lee
Keyword(s):  
Tobacco Industry ◽  
Grey Literature ◽  
Evidence Base ◽  
Complex Problem ◽  
Primary Data ◽  
Original Research ◽  
Tobacco Products ◽  
Illicit Trade ◽  
Tobacco Control Policies ◽  
Transnational Tobacco Companies

IntroductionThe illicit trade in tobacco products (ITTP) is widely recognised as a substantial and complex problem in Canada. However, the independence of available data and quality of analyses remains unknown. Reliable and accurate data on the scale and causes of the problem are needed to inform effective policy responses.MethodsWe searched the scholarly and grey literature using keywords related to ITTP in Canada. We identified 26 studies published in English since 2008 that present original research drawing on primary data. We analysed these studies for their independence from the tobacco industry, methodology, findings and gaps in knowledge.ResultsThe study finds 42% of the literature reviewed has links to the tobacco industry. These studies provide insufficient methodological detail, present higher estimates of the volume of ITTP and attribute the causes to higher rates of tobacco taxation. The classification of all indigenous tobacco sales as illicit, by both industry linked and independent studies, contributes to overestimates and serves the interests of transnational tobacco companies. There is need for independent and comprehensive data on the ITTP in Canada over time, across population groups and geographies.ConclusionWhile there is evidence that the ITTP in Canada is a major and complex issue that requires effective tobacco control policies, there is a limited evidence base on which to develop such responses. This review finds industry-linked studies lack independence, employ biased methodologies and serve tobacco industry interests. Independent studies present more rigorous approaches, but primarily focus on youth and the province of Ontario.

scholarly journals Tobacco industry strategies undermine government tax policy: evidence from commercial data

2017 ◽  
Vol 27 (5) ◽  
pp. 488-497 ◽  
Author(s):  
Rosemary Hiscock ◽  
J Robert Branston ◽  
Ann McNeill ◽  
Sara C Hitchman ◽  
Timea R Partos ◽  
...  
Keyword(s):  
Tax Policy ◽  
Tobacco Industry ◽  
Pricing Strategies ◽  
Point Of Sale ◽  
Price Increases ◽  
Tobacco Control Policies ◽  
Health Gains ◽  
Tobacco Tax ◽  
The Uk ◽  
Tobacco Taxation

ObjectiveTaxation equitably reduces smoking, the leading cause of health inequalities. The tobacco industry (TI) can, however, undermine the public health gains realised from tobacco taxation through its pricing strategies. This study aims to examine contemporary TI pricing strategies in the UK and implications for tobacco tax policy.DesignReview of commercial literature and longitudinal analysis of tobacco sales and price data.SettingA high-income country with comprehensive tobacco control policies and high tobacco taxes (UK).Participants2009 to 2015 Nielsen Scantrak electronic point of sale systems data.Main outcome measuresTobacco segmentation; monthly prices, sales volumes of and net revenue from roll-your-own (RYO) and factory-made (FM) cigarettes by segment; use of price-marking and pack sizes.ResultsThe literature review and sales data concurred that both RYO and FM cigarettes were segmented by price. Despite regular tax increases, average real prices for the cheapest FM and RYO segments remained steady from 2013 while volumes grew. Low prices were maintained through reductions in the size of packs and price-marking. Each year, at the point the budget is implemented, the TI drops its revenue by up to 18 pence per pack, absorbing the tax increases (undershifting). Undershifting is most marked for the cheapest segments.ConclusionsThe TI currently uses a variety of strategies to keep tobacco cheap. The implementation of standardised packaging will prevent small pack sizes and price-marking but further changes in tax policy are needed to minimise the TI’s attempts to prevent sudden price increases.

scholarly journals Impact of a recent tobacco tax reform in Argentina

2020 ◽  
Vol 29 (Suppl 5) ◽  
pp. s300-s303
Author(s):  
Martín González-Rozada
Keyword(s):  
Price Elasticity ◽  
Tax Reform ◽  
Cost Effective ◽  
Cigarette Consumption ◽  
Price And Income Elasticities ◽  
Tobacco Tax ◽  
Short Run ◽  
The Government ◽  
Demand Price Elasticity ◽  
The Impact

The literature on policies for the control of the tobacco epidemic suggests that increasing excise taxes on the consumption of tobacco products is the most cost-effective policy. Cigarette tax structure in Argentina is very complex. All the tax bases for cigarette consumption taxes are related and, therefore, any modification of a tax affects the collection of the rest of the taxes. This is important given that funds raised by one of the taxes, the Special Tobacco Fund (FET), are allocated among the tobacco provinces according to the value of tobacco production. These provinces oppose in the congress to any reform that increase taxes on cigarette consumption that negatively affects these funds. In May 2016, the government decided to increase the rate of one of the taxes, the internal tax, from 60% to 75%. We study the impact on cigarettes’ demand price elasticity, consumption and tax revenues of this tobacco tax reform. Using an Error Correction Model, we estimate short-run and long-run demand price and income elasticities. We find that the tax reform of May 2016 induced an increase in the magnitude, in absolute value, of the short-run demand price elasticity and at the same time increased the funds collected by the FET. We simulate the effects of the tax reform over the government revenues and per-capita consumption of cigarettes showing that additional increments in taxes would increase revenues and diminish consumption of cigarettes.

scholarly journals Illicit Cigarette Consumption and Government Revenue Loss in Vietnam: Evidence from a Primary Data Approach

2019 ◽  
Vol 16 (11) ◽  
pp. 1960 ◽  
Author(s):  
Minh T. Nguyen ◽  
Son The Dao ◽  
Nga Que Nguyen ◽  
Mike Bowling ◽  
Hana Ross ◽  
...  
Keyword(s):  
Cigarette Consumption ◽  
Primary Data ◽  
Tax Revenue ◽  
Average Price ◽  
Illicit Trade ◽  
Face To Face ◽  
Market Control ◽  
Cigarette Pack ◽  
Comprehensive Picture ◽  
Using Data

This article provides the first comprehensive picture and independent estimates of both illicit cigarette consumption and the resulting government tax revenue loss in Vietnam using data from a representative survey of cigarette smokers in 12 Vietnamese provinces. The survey consisted of face-to-face interviews and on-site cigarette pack examinations. We find that more than 720 million illicit cigarette packs, or 20.7% of total cigarette consumption, circulated in Vietnam in 2012. Consequently, government tax revenue loss due to illicit trade ranged from US $223 to 295 million. Our estimates also indicate that (1) the most popular illicit brands were Jet and Hero, both were sold at higher prices than the average legal brand; (2) the average price of illicit cigarettes was 51% higher than the average price of legal cigarettes; and (3) majority of illicit cigarettes were sold at convenience stores, which were registered and licensed businesses. Our findings suggest that prices are not a driver of illicit cigarette consumption in Vietnam, and this illicit trade is at least partially a consequence of weak market control enforcement.

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