The report looks at the causes of the illicit tobacco trade and how governments can protect tobacco excise duty revenues based on well planned and designed tobacco taxation and appropriate enforcement. Notably, we would present these elements of our analysis:
– Correlation between tax yield and level of illicit trade, also affordability vs enforcement;
– Comparison between tobacco and alcohol that demonstrates how affordability becomes a principal driver of illicit trade, even more so in the absence of adequate enforcement;
– Some specific country case-studies, eg. from Russia, looking at all the factors that contributed to the recent growth of illicit tobacco trade;
– Resulting insights into the need to align taxation strategy and anti-illicit trade measures.
Our intent is that by clearly identifying and explaining the root causes of illicit trade, the focus of governments, regulators, enforcement and other influential stakeholders will shift to tackling both illicit demand stimuli and supply development in a unified way, resulting in more focused, cost-efficient and effective preventative measures being adopted.