Chain reaction: The link between tobacco tax policies and illicit trade
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Ministry of Health and Wellness, Kingston, Jamaica
Publication date: 2020-10-22
Tob. Prev. Cessation 2020;6(Supplement):A6
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Studies have shown the inextricable connection between the increase in tobacco taxation and the reduction of illicit trade in tobacco products. The tobacco industry, however, continues its crusade of denying the relationship between the two, purporting that taxation opens up any market and border to illicit trade. That notwithstanding, taxation is deemed to be the most critical strategy to tackle the problem of illicit trade in tobacco products. It is, therefore, essential for governments to implement appropriately designed policies or enact legislation imposing tobacco fiscal policies in order to strategically take advantage of the benefits to be derived.

Country specific research and experience, augmented by global evidence, were analysed to uncover the importance of a strong legal framework, driven and supported by political will, in tackling illicit trade in tobacco products.

Properly imposed and systematic tax increases with effective enforcement will substantially reduce tobacco consumption overtime. Jamaica’s experience has seen an increase in a specific special consumption tax rate for cigarettes between 2005 and 2017 (i.e. from $1920 per 1000 sticks in 2015 to $17000 per 1000 sticks in 2017), which has resulted in a consequent decline in illicit trade, despite arguments to the contrary by the tobacco industry.

The link between tobacco taxation and a decline in illicit trade is undeniable. While political will is the engine needed to drive the implementation of fiscal policies, enforcement and collaboration across various sectors of government and civil society are required to effectively tackle illicit trade and accelerate its decline.