Illicit Trade in Tobacco Products Need Not Hinder Tobacco Tax Policy Reforms and Increases (White Paper)

This white paper was written by Evan Blecher, PhD and Hana Ross, PhD and examines the relationship (or lack thereof) between increasing excise taxes on tobacco products and illicit trade. The paper concludes based on extensive global evidence that illicit trade should not be an impediment to increasing excise taxes on tobacco products. The paper finds that opposition to increasing excise taxes on tobacco products exaggerate the significance of illicit trade. The paper also finds that taxes and prices are not a key determinant of illicit trade and that many other factors are more likely to be causal in levels of illicit trade. The paper cites research that finds increasing excise taxes on tobacco products provides greater government revenue, reduces the macroeconomic burden associated with tobacco consumption, and improves overall health. The paper recommends that governments adopt higher excise taxes on tobacco products as part of a comprehensive tobacco control policy that includes more stringent administrative, policy, and enforcement measures to reduce illicit trade and consumption of tobacco products.

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A corresponding policy brief can be found here.