Understanding and Measuring Cigarette Tax Avoidance and Evasion: A Methodological Guide

This guide, released at the 2015 World Conference on Tobacco OR Health, updates and expands the 13-year old World Bank Toolkit on how to estimate the scope of tobacco smuggling. It draws on the results of numerous empirical studies that tested the applicability of five methods described in the Toolkit while critically evaluating new methods that emerged in response to the evolving nature of illicit tobacco trade, the policy debates surrounding the issue, and the development of new technologies.

This guide covers not only smuggling of tobacco products, but also tax evasion related to illicit tobacco trade and legal tax avoidance, since the methods to estimates these phenomena are often intertwined.

It also provides guidance on how to assess the quality of existing estimates, including those offered by the tobacco industry. Unlike the World Bank Toolkit, this guide does not cover the topic of how to reduce tax avoidance and tax evasion and instead refers the reader to the WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products.