The impact of tobacco taxation on illicit cigarette trade in selected low- and middle-income countries
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Economics of Tobacco Control Project, School of Economics, University of Cape Town, Cape Town, South Africa
Laura Rossouw   

Senior Research Officer, Economics of Tobacco Control, University of Cape Town, Cape Town, South Africa
Publication date: 2019-10-12
Tob. Induc. Dis. 2019;17(Suppl 1):A9
The importance of monitoring and deterring the illicit trade of tobacco is illuminated by the recent ratification of the WHO’s Protocol to eliminate illicit trade of Tobacco Products. While the correlatory relationship between tobacco taxation and illicit trade of cigarettes have been measured globally, there is a paucity of research on the impact that a change in tax and price policy measures will have on illicit trade. Measuring this impact objectively is crucial to countering biased estimates aimed at influencing public opinion and policy makers. The objective of the project was to use the exogeneity of tobacco taxation and price policy changes in four low- and middle-income countries (the Gambia, Georgia, Mongolia and South Africa) as natural experiments to measure this impact.

Using primary-collected household survey data and the discarded pack collection methodology, we measured illicit trade before and after policy changes.

In Mongolia, South Africa and Georgia, the policy had no impact on illicit trade. Mongolia observed a decline in their illicit trade during this period, from 15.4% (April 2017) to 6.3% (May/June 2018). In the Gambia, last minute changes to planned policy changes meant that we could only collect one wave of cross-sectional data. However, the data revealed that illicit trade is low at 0.9%-7.3%. We will also relate methodological lessons and recommendations from the studies, specifically recommendations for rapid response research by policymakers on this topic.

The evidence indicates that tobacco taxation does not have an impact on the illicit trade of cigarettes.