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CEO Perspective

Statement on “Confronting Illicit Tobacco Trade,” A New Report From World Bank Group

The following is a statement from José Luis Castro, President and CEO, Vital Strategies, in response to “Confronting Illicit Trade in Tobacco: A Global Review of Country Experiences,” a new report from World Bank Group.

“Tobacco kills more than 7 million people and costs the global economy nearly two trillion dollars each year. The evidence is clear: policies that reduce the affordability of tobacco are most effective in reducing use and discouraging young people from starting to use tobacco. For too long the tobacco industry has used claims about illicit trade to mislead the public and deter governments from implementing a range of tobacco control policies that can save lives, particularly high tobacco taxes and prices. The World Bank Group’s new report is a welcome rebuttal of the industry’s claims, proving that governments in very different countries are equally able to implement practical steps to reduce illicit trade while increasing tobacco taxes, strengthening economies and public health.

“We hope “Confronting Illicit Trade in Tobacco” emboldens governments across the globe to advance global efforts to reduce illicit trade that harms health, equity, governance and government revenues.”

Evidence presented in the report shows that illicit trade is higher in countries with low tobacco taxes and prices than in countries with high tobacco taxes and prices – undermining data and claims presented by the tobacco industry. The authors conclude that non-price factors such as corruption, weak regulatory frameworks, and the presence of informal distribution networks appear to be more important factors in determining the extent of illicit trade. The report also highlights the tobacco industry’s track record of involvement in tobacco smuggling, reinforcing the need for supply chain controls and track and trace systems that are independent of the tobacco industry.

Additional background:

The World Bank Group launched Confronting Illicit Trade in Tobacco: A Global Review of Country Experiences at the Prince Mahidol Award Conference 2019 in Thailand, on Feb. 1, 2019. The report sets out evidence from more than 30 countries, confirming that any country can reduce illicit trade and that high tobacco taxes do not increase cigarette smuggling. World Bank re-affirms that it is critical to address illicit trade in the context of a comprehensive tobacco control strategy, to support public health and public finances. The report includes case studies from Australia, Bangladesh, Botswana, Canada, Chile, Colombia, Ecuador, the EU, Georgia, Indonesia, Ireland, Kenya, Lesotho, Malaysia, Mexico, Namibia, OECS and Trinidad and Tobago, the Philippines, Senegal, South Africa and Eswatini, and Uruguay.