scholarly journals Tobacco tax evasion in Western Balkan countries: tax evasion prevalence and evasion determinants

2022 ◽  
pp. tobaccocontrol-2021-056879
Author(s):  
Marko Vladisavljevic ◽  
Jovan Zubović ◽  
Olivera Jovanovic ◽  
Mihajlo Djukic ◽  
Natasa Trajkova Najdovska ◽  
...  

Background and objectiveTobacco tax evasion undermines the goal of tobacco taxes as a tobacco control measure to make tobacco products less affordable, increases the health risks for those who smoke and decreases the government revenue. This paper analyses the tobacco tax evasion in six Western Balkan (WB) countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The aim of this research is to estimate the size of the illicit market and identify the main determinants of tax evasion activities in the Southeastern European region.Data and methodsData from 2019 Survey on Tobacco Consumption in Southeastern Europe (STC-SEE) are used. STC-SEE provides uniquely comparable nationally representative data on smoking behaviour for adult (18–85 years old) population for each country. Tax evasion is defined on the basis of available information on tax stamps, health warnings, price and the place of purchase, in accordance with the previous research on tax evasion. In order to estimate the determinants of illicit purchases we use binary choice model of tax evasion.ResultsThe study finds that 20.4% of all current smokers in WB countries evade taxes on tobacco products, with evasion being much more frequent for hand-rolled (HR) tobacco (86.7%) than for the manufactured cigarettes (MC) (8.6%). While HR is predominantly illicit in all six countries, MC evasion varies significantly, with evasion being significantly higher in Montenegro and Bosnia and Herzegovina. Results further suggest that tax evasion is higher in the statistical regions where institutional capacities to tackle illicit trade are lower, in municipalities bordering countries with high MC evasion, as well as among smokers with low income, women and elderly. We also provide evidence that higher tobacco taxes and prices do not increase illicit consumption.ConclusionThe findings from the research suggest that in order to decrease tax evasion, governments should put additional effort to strengthen institutional capacities to tackle illicit tobacco markets. Furthermore, improving regional coordination in development and implementation of tobacco control policies, including the prevention of illicit market, is essential in lowering evasion in all WB countries. Finally, WB countries should regulate and enforce excise tax stamp requirements on the HR tobacco market to a much higher degree.

2014 ◽  
Vol 7 (1) ◽  
pp. 36-48 ◽  
Author(s):  
Nathan Cowie ◽  
Marewa Glover ◽  
Dudley Gentles

Purpose – Taxing tobacco is one of the most effective means to reduce smoking but concerns about the impact on poor smokers are a barrier. New Zealand resumed increasing tobacco taxes in April 2010. The paper hypothesised smokers would attempt to stop smoking and/or adapt, changing their smoking behaviours in response to price increases. The paper aims to discuss these issues. Design/methodology/approach – The authors conducted a door knock survey of smokers and recent ex-smokers who were home when visited. Participants (n=428) were from socioeconomically deprived neighbourhoods of Auckland with large proportions of Māori and Pacific Island people. Findings – Many smokers (66 per cent) attempted to quit an average of 3 times. More than 40 per cent stopped for at least 24 hours without intending to quit altogether, monthly or more. Consumption reduced among 40 per cent of participants, by an average 7.1 cigarettes daily. More than a fifth of participants switched to cheaper brands. Switching from factory made cigarettes to roll your own tobacco (6 per cent) or vice versa (5 per cent) was uncommon. Research limitations/implications – The method resulted in a low response rate. Tobacco tax is associated with reduced consumption and high levels of frequent quit attempts in socioeconomically deprived communities therefore our study supports tax increases as a means of reducing smoking. Originality/value – This is the first paper to investigate the effect of large recent New Zealand tobacco tax increases on low-income smokers’ adaptive behaviours.


BMJ Open ◽  
2018 ◽  
Vol 8 (10) ◽  
pp. e021340 ◽  
Author(s):  
Heikki Hiilamo ◽  
Stanton Glantz

ObjectiveTo quantify changes in tobacco tax rates and cigarette affordability after countries ratified the WHO Framework Convention on Tobacco Control (FCTC) using with the WHO MPOWER standards.MethodsWe used logistic regression to assess the association of FCTC ratification with adoption of at least 50% and 75% (high) of retail price tobacco tax rates for the most sold brands in countries, accounting for years since ratification and other covariates. We also compared cigarette affordability in 2014 with 1999.ResultsBy 2014, 44% of high-income countries had taxes above 75% of retail value compared with 18% in 1998/1999. In 15 years, 69 countries increased the tobacco tax rate, 33 decreased it and one had the same tax rate. FCTC ratification was not associated with implementing high tobacco taxes. More fragile countries in terms of security, political, economic and social development were less likely to have at least 50% and 75% tobacco tax rates in 2014 compared with 1999. The higher the cigarette prices in 1999 the less likely the countries were to have at least 75% tobacco tax rates in 2014. However, cigarettes were less affordable in 2014 than in 1999 in countries that had ratified FCTC earlier.ConclusionsDespite widespread FCTC ratification, implementing higher tobacco taxes remains incomplete. Guidelines for FCTC Article 6 implementation should assign definite targets for tobacco taxes and for implementation of a tax escalator that gradually increases taxes to match rising income levels. Fragile countries are less likely to have high tobacco taxes and less affordable cigarettes. The tobacco control community should intensify efforts to help fragile countries improve performance in FCTC implementation both through strengthening their administrative and technical capacity and through supporting basic functions of government.


2020 ◽  
pp. tobaccocontrol-2019-055315 ◽  
Author(s):  
Stéphane Verguet ◽  
Patrick K A Kearns ◽  
Vaughan W Rees

BackgroundTobacco taxes, as with other ‘sin taxes’, are generally regarded as a highly cost-effective mechanism to reduce consumption but are often considered by policymakers to be regressive, undermining efforts to fully implement them at levels recommended by the WHO due to concerns of fairness. We aim to demonstrate whether there are circumstances in which the impacts of additional tobacco taxes are not regressive, using a standard income-share accounting definition of tax burden.Methods and findingsWe apply mathematical modelling and explore the hypothetical distributions in the net change in tobacco taxes and cigarette expenditures by income group, following an increase in tobacco taxation. The hypothetical distribution per income group of additional taxes and cigarette expenditures borne by individuals following tobacco tax hikes was calculated with respect to a selection of parameters including: the change in the retail price of cigarettes, the price elasticity of demand for tobacco, smoking prevalence, cigarette consumption and individual income. We determine the range of hypothetical parameter values for which increased tobacco taxation should not be considered to penalise the poorest income groups when examining marginal cigarette consumption expenditures and using an accounting definition of tax burden.ConclusionsOur findings question the doctrine that tobacco taxes are uniformly regressive from a standard income-share accounting view and point to the importance of the specific features of tax policy to shape a progressive approach to tobacco taxation: tobacco tax increases are less likely to be regressive when accompanied by a broad framework of demand-side measures that enhance the capacity of low-income smokers to quit tobacco use.


2021 ◽  
Author(s):  
Matthew Rimmer

EXECUTIVE SUMMARYRecommendation 1As part of building upon Helen Clark’s legacy in respect of the Smoke-Free Environments Act 1990 (NZ), Jacinda Ardern’s New Zealand Government should pass bold and ambitious proposals for the Smokefree Aotearoa 2025 Action Plan. Recommendation 2The New Zealand Government should learn from the legal disputes and the public policy debate over the plain packaging of tobacco products. This pioneering tobacco control measure was recognised as being an expression of the WHO Framework Convention on Tobacco Control 2003, and being consistent with the TRIPS Agreement 1994, the TBT Agreement 1994, and GATT 1994. The New Zealand Government should seek to make use of such flexibilities in international law in its development of tobacco control measures under the Smokefree Aotearoa 2025 Action Plan.Recommendation 3The New Zealand should implement a bold and ambitious Smokefree Aotearoa 2025 Action Plan in order to implement the WHO Framework Convention on Tobacco Control 2003, and protect public health in New Zealand.Recommendation 4The New Zealand Government should support enhanced Indigenous-led tobacco control measures – taking into account the Treaty of Waitangi 1840, the WHO Framework Convention on Tobacco Control 2003, the United Nations Declaration on the Rights of Indigenous Peoples 2007, and the establishment of the new Maori Health Authority.Recommendation 5The New Zealand Government should support social marketing campaigns to promote the Smokefree Aotearoa 2025 Action Plan.Recommendation 6As part of its increased regulation of digital platforms, the New Zealand Government should seek to engage in enhanced regulation of social media advertising by tobacco companies and e-cigarette companies. As well as targeting the tobacco companies, the New Zealand Government should focus on the behaviour of advertisers and the Internet influencers, and regulate the role of intermediaries, such as digital platforms, social media sites, and other Internet sites.Recommendation 7The New Zealand Government should invest in research, evaluation, monitoring and reporting of the Smokefree Aotearoa 2025 Action Plan.Recommendation 8The New Zealand Government should provide for effective compliance and enforcement mechanisms for tobacco control measures in respect of the Smokefree Aotearoa 2025 Action Plan. The New Zealand Government should explore the need for law reform in respect of civil liability and criminal liability for tobacco companies. Recommendation 9New Zealand should establish a licensing system for all retailers of tobacco and vaping products. New Zealand should also encourage retailers to shift towards the sale of healthy products.Recommendation 10The New Zealand Government should reduce the retail availability of smoked tobacco products by significantly reducing the number of retailers based on population size and density.Recommendation 11The New Zealand Government should reduce the retail availability of tobacco by restricting sales to a limited number of specific store types.Recommendation 12The New Zealand Government should follow the lead of the United States and Singapore, and introduce a smokefree generation policy.Recommendation 13The New Zealand Government should encourage retailers and small businesses to stop selling smoked tobacco products, and instead diversity into the sale of healthier products.Recommendation 14The New Zealand Government should support reducing the nicotine in smoked tobacco products to very low levels. The New Zealand Government should also prohibit the use of menthol in tobacco products.Recommendation 15The New Zealand Government should support prohibiting filters in smoked tobacco products.Recommendation 16The New Zealand Government should have the flexibility of prohibiting tobacco product innovations through regulations.Recommendation 17The New Zealand Government should increase the tobacco tax rate, establish a new tax on e-cigarettes, as well as set a minimum price for tobacco products. The New Zealand Government should also look to take action in respect of any tax evasion by tobacco companies and e-cigarette companies.Recommendation 18The New Zealand Government should include smoke-free policies in its Smokefree Aotearoa 2025 Action Plan.Recommendation 19The New Zealand Government, the corporate sector, and civil society should further expand tobacco divestment policies.Recommendation 20The New Zealand Government needs to ensure that its tobacco endgame measures – and its proposals for Smokefree Aotearoa 2025 Plan - are safeguarded against the threat of tobacco interference.


2019 ◽  
pp. tobaccocontrol-2019-055066 ◽  
Author(s):  
Dharma Bhatta ◽  
Eric Crosbie ◽  
Stella Bialous ◽  
Stanton Glantz

BackgroundNepal was a monarchy, then a dictatorship, then a democracy. This paper reviews how tobacco control progressed in Nepal in the context of these changes in government from 1950 through 2006.MethodsWe triangulated tobacco industry documents, newspaper articles and key informant interviews.ResultsUntil 1983, the tobacco industry was mostly state owned. Transnational tobacco companies entered the Nepalese market through ventures with Surya Tobacco Company Private Limited (with Imperial Tobacco Company and British American Tobacco) in 1983 and Seti Cigarette Factory Limited (with Philip Morris International [PMI]) in 1985. Seminars and conferences on tobacco, celebrations of World No Tobacco Day (WNTD) and efforts by WHO helped promote tobacco control in Nepal beginning in the 1970s. Tobacco advocates in Nepal pushed the government to issue executive orders banning smoking in public places in 1992 and tobacco advertising in electronic media in 1998, and to introduce a tobacco health tax in 1993. The tobacco industry lobbied against these measures and succeeded in keeping the tobacco tax low by challenging it in court. Tobacco advocates sued the government in 2003 and 2005, resulting in a June 2006 Supreme Court decision upholding the smoking and advertising bans and requiring the government to enact a comprehensive tobacco control law.ConclusionsPolitical instability, conflict, weak governance and the dictatorship significantly affect tobacco control activities in low-income and middle-income countries. Nepal shows that tobacco control advocates can take advantage of global events, such as WNTD, and use domestic litigation to maintain support from civil societies and to advocate for stronger tobacco control policies.


2020 ◽  
Vol 29 (Suppl 5) ◽  
pp. s331-s336 ◽  
Author(s):  
Marko Vladisavljevic ◽  
Jovan Zubović ◽  
Mihajlo Đukić ◽  
Olivera Jovanović

In this paper, we use Deaton’s demand model and Household Budget Survey data from 2006 to 2017 to provide a first robust and reliable estimate of cigarettes price elasticity for Serbia. The case of Serbia is particularly interesting and important as it provides evidence for a country in which tobacco market is characterised by the high tobacco consumption, low prices and large perceived impact of multinational tobacco companies on public revenues, export and employment, given their considerable cigarette production in Serbia. The price elasticity of cigarettes is estimated at −0.639, in line with the previous estimates for the low-income and middle-income countries. Estimated negative cigarettes price elasticity for Serbia suggests that tobacco tax policy could be used effectively to reduce cigarette consumption in Serbia, which could lower the harmful health effects of cigarettes. Furthermore, a calculation based on the estimated elasticity suggests that increasing tobacco taxes could also have positive fiscal effects, as the expected revenue from the taxes would increase.


2018 ◽  
Vol 4 (Supplement 2) ◽  
pp. 236s-236s
Author(s):  
A.P. Teixeira

Background and context: The government willingness to legislate tobacco control, as part of the complex tobacco landscape developed by the Initiative on the Study and Implementation of Systems (ISIS), is directly related to tobacco taxes and government income. According to the NCI,1 “The willingness of government to take actions against tobacco interests depends on the balance of forces created by the protobacco and antitobacco constituencies and the government's perceptions of health risks associated with tobacco use. Increased taxes on tobacco are an early result of this growing government willingness to act against tobacco interests”. Aim: Demonstrate that the implementation of Article 6 of the WHO Framework Convention on Tobacco Control (FCTC) is a cost-effective measure that results in reduced prevalence and increased tax revenues. Strategy/Tactics: In December 2011, the Brazilian government established a new taxation system and a minimum price policy for cigarettes, aligned to the Article 6 of the WHO FCTC to reduce the demand on tobacco products. Program/Policy process: The new federal taxation system on tobacco products started in 2012 and defined progressive and annual increases by 2016. The reduction in prevalence followed this trend, as did the increase in tax revenue. Some federal states also increased their taxes to tobacco products in the same period, but were not accounted for in this study. Outcomes: This new policy has raised the level of total taxes and, even contributing to the reduction of cigarette consumption, the government income has increased 19% since 2011, and 130% from 2007 to 2016. According to the Risk and Protective Factors Surveillance for Chronic Diseases Telephone Survey (VIGITEL), the total prevalence rate decreased from 15.6% in 2007 to 10.4% in 2015. The national cigarette production decreased from 5,701,586 million packs with 20 units to 2,660,457 in 2016, reflecting the reduction in consumption. [Figure: see text] What was learned: Brazil´s experience shows that there is no economic or revenue risk by raising the tobacco taxes, an argument used by the tobacco industry. In the long term, when consumption is brought to very low levels, there may be a reduction in the revenues, but also the spending on tobacco-related diseases shall decline. Reference 1. National Cancer Institute. Greater Than the Sum: Systems Thinking in Tobacco Control. Tobacco Control Monograph No. 18. Bethesda, MD, U.S. Department of Health and Human Services, 2007.


2018 ◽  
Vol 28 (6) ◽  
pp. 657-662 ◽  
Author(s):  
Gladis Chavez ◽  
Meredith Minkler ◽  
Patricia A McDaniel ◽  
Jessica Estrada ◽  
Ryan Thayer ◽  
...  

BackgroundCalifornia’s tobacco tax increased by $2.00 per pack in 2017. Although such increases are among the most effective tobacco control strategies, little is known about their impact from the perspective of corner store owners in low-income neighbourhoods with high concentrations of tobacco outlets.MethodsWe interviewed 38 corner store owners and managers in San Francisco’s Tenderloin, the district with the city’s highest tobacco outlet density, 60–90 days following implementation of the tax increase. Questions focused on perceptions of the impact of the higher tobacco tax on their revenues, customers and tobacco company promotions. We used qualitative content analysis to identify, compare and reconcile key themes.ResultsMost retailers reported a decline in cigarette sales, with customers buying fewer cigarettes, switching to cheaper brands or other products like marijuana, or trying to quit smoking. Retailers described challenges associated with running a small business and selling tobacco and concerns about selling a product that is ‘bad’ for customers’ health. Contrary to expectation, tobacco companies appeared to be offering few product promotions in this neighbourhood.ConclusionsSmall, independent retailers’ concerns, about selling tobacco and about the health and well-being of customers, suggest that such retailers may be important allies in tobacco control efforts,particularly those focused on the point-of-sale.


2019 ◽  
Vol 29 (Suppl 4) ◽  
pp. s227-s233 ◽  
Author(s):  
Megan Little ◽  
Hana Ross ◽  
George Bakhturidze ◽  
Iago Kachkachishvili

BackgroundIn 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.MethodsIn 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.FindingsThe 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.ConclusionsDespite 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.


2017 ◽  
Vol 27 (1) ◽  
pp. 83-89 ◽  
Author(s):  
Hana Ross ◽  
Leelmanee Moussa ◽  
Tom Harris ◽  
Rajive Ajodhea

BackgroundMauritius has one of the highest smoking prevalences in Africa, contributing to its high burden of non-communicable diseases. Mauritius implemented a series of tobacco control measures from 2009 to 2012, including tobacco tax increases. There is evidence that these policies reduced tobacco consumption, but it is not clear what impact they had across different socioeconomic groups.MethodThe impact of tobacco control measures on different income groups was analysed by contrasting household tobacco expenditures reported in 2006–2007 and 2012 household expenditure surveys. We employed the seemingly unrelated regression model to assess the impact of tobacco use on other household expenditures and calculated Gini coefficients to assess tobacco expenditure inequality.ResultsFrom 2006 to 2012, excise taxes and retail cigarette prices increased by 40.6% and 15.3% in real terms, respectively. These increases were accompanied by numerous non-price tobacco control measures. The share of tobacco-consuming households declined from 35.7% to 29.3%, with the largest relative drop among low-income households. The Gini coefficient of household tobacco expenditures increased by 10.4% due to decreased spending by low-income households. Low-income households demonstrated the largest fall in their tobacco budget shares, and the impact of tobacco consumption on poverty decreased by 26.2%. Households that continued purchasing tobacco reduced their expenditures on transportation, communication, health, and education.ConclusionsThese results suggest that tobacco control policies, including sizeable tax increases, were progressive in their impact. We conclude that tobacco use increases poverty and inequality, but stronger tobacco control policies can mitigate the impact of tobacco use on impoverishment.


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