Taking a stand against illegal tobacco

Taking a stand against illegal tobacco

The illegal trade in tobacco causes significant loss to government revenues, brings crime into our communities, and undermines public health efforts.

It is estimated that 600 billion illegal cigarettes are smoked across the world every year. That’s around 10% of global volumes. The illegal trade in tobacco is a global business, operated by criminal and terrorist organizations. The profits from illegal tobacco underwrite other forms of crime, from drug farming and smuggling to human trafficking, leading to serious social problems. Illegal tobacco is not a victimless crime. It’s a crime with consequences.

In Taiwan, 2.5 billion cigarettes (or 6.4% of the total) were smuggled into the country in 2014, robbing the national coffers of NT$4.3 billion in tax revenues.*

Empirical evidence demonstrates that excessive tobacco tax hikes drive consumers to cheap, illegal products.

  • Illegal seizures surged by 65% after the tobacco health surtax was doubled, from NT$5 to NT$10 per pack, in 2006.
  • Illegal seizures surged by 50% after the tobacco health surtax was again doubled, from NT$10 to NT$20 per pack, in 2009.
  • Illegal seizures surged by 58.48% after the government proposed a further rise in the tobacco health surtax, from NT$20 to NT$40 per pack, in 2013.

The Government needs to carefully consider the risk of spurring illegal trade before introducing drastic tax hikes or extreme regulations which would only fuel such activity. Any tax adjustment should be reasonable, moderate, and predictable.

* Oxford Economics titled Asia-16 Illicit Tobacco Indicator 2014