The Price We Pay: Six Industry Pricing Strategies That Undermine Life-Saving Tobacco Taxes
When their cigarettes are smuggled and sold on the black market, tobacco companies enjoy two major perks: They save money by paying less taxes and their products become cheaper for consumers. But governments are robbed of those tax revenues and public health suffers. Effective track and trace systems allow officials to track cigarettes from their place of manufacture and trace them to the point where all taxes have been paid—and identify the weak points in the supply chain where product enters the illicit market. Tobacco companies, therefore, have a vested interest in influencing these systems to protect the benefits they reap from illicit trade. To run effective track and trace systems and ward off attempted industry involvement, governments must stay vigilant and remain independent of the industry.
In April 2019, The South African Revenue Service (SARS) announced a tender for implementing track and trace measures which would dramatically increase authorities’ ability to reduce the tobacco black market. However, the process was undone in May 2020, when plans for a nationwide track and trace system were suddenly cancelled—in large part due to tobacco industry opposition. SARS’ commissioner even went so far as to say their illicit trade strategy “may or may not require track and trace.” Learn more about how the tobacco industry is derailing South Africa’s attempts to control illicit trade.
As a Party to the Illicit Trade Protocol, Pakistan is required to develop a track and trace system that is independent from tobacco industry involvement. This effort, however, has been undermined by the tobacco industry, as the technology for the country’s new system will be provided by a company with known ties to the industry’s own ineffective track and trace system, Codentify. Learn more about these links and how using a flawed system could hinder Pakistan’s efforts to curb cigarette smuggling.