The Global Illicit Cigarette Trade

1. The Global Illicit Cigarette Trade Based on How Eliminating the Global Cigarette Trade would Increase Tax Revenue and Save Lives. By Luk Joossens, David Merriman, Hana Ross, and Martin Raw. Paris: International Union against Tuberculosis and Lung Disease; 2006.

2. The tobacco epidemic • Tobacco killed 100 million smokers in 20th century. • Currently, there are 5.4 million deaths every year due to tobacco. • If current smoking patterns continue, it will cause some 8.3 million deaths each year by 2030. Source: World Health Organization. The MPOWER Package. 2008

3. The global illicit cigarette trade • 11.6% of the global cigarette market is illicit • The burden of illicit trade falls mainly on low and middle income countries

4. Effects of illicit trade • Robs governments of tax revenue • Increases availability of cheap cigarettes • Increases cigarette consumption • Increases tobacco-related deaths

5. Price matters… According to the World Bank, price increases are the most effective and cost effective means of reducing tobacco consumption. Source: World Bank. Curbing the Epidemic. 1999

6. Price difference between illicit and legal cigarettes in selected countries * Cigarettes in loose bags of 200 † Smuggled Marlboro

7. Illicit market share (%) No data 0 - 5 6 - 10 11 - 20 21 - 30 30+ Scale and impact of global illicit cigarette trade

8. Scale and impact of global illicit cigarette trade

9. Levels of smuggling depend on... • Ease and cost of smuggling tobacco in a country • Presence and level of development of organized crime networks • Likelihood of getting caught and prosecuted • Punishment for convicted smugglers • Presence of informal distribution networks • Industry participation • Level of corruption

10. Legal price and illicit trade (2007)

11. Lost revenue • US$40.5 billion in tax revenue is lost by governments worldwide • The loss is higher than the GDP of some countries.

12. Saves lives Eliminating illicit cigarette trade would: • Result in an overall cigarette price increase of 3.9% and a global cigarette consumption decline of 2% • From 2030 onward, more than 160,000 lives would be saved each year—132,000 lives in low and middle income countries. In just six years after 2030, more than 1 million lives would be saved.

13. Generates new revenues If the illicit cigarette trade was eliminated… • Governments would immediately gain at least US$31.3 billion in annual revenues worldwide • Governments in low and middle income countries would gain US$18.3 billion

14. Recommendations • Control of the supply chain in tobacco products • Security and preventive measures • Enforcement measures • International cooperation