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Global Study Reveals Alarming Rise of Illegal Tobacco Trade Threatening Nations

Zambia tobacco grading
tobacco grading Image source: atoi.org

A new report has unveiled a disturbing trend of illegal tobacco trade sweeping through Canada, France, the Philippines, and the United Kingdom, posing significant threats to national economies and public safety.

Commissioned by JTI and conducted by Intrinsic Insight, the study “Fighting the Dark Underworld: How the illegal trade in tobacco threatens to overwhelm us” sheds light on the pervasive influence of organized crime in these regions. It underscores how unstable geopolitical environments, fragile economies, and inadequate deterrents create ideal conditions for criminal networks to thrive.

Key findings highlight a growing normalization of purchasing illegal tobacco products among adult smokers, with 43% comfortable buying cigarettes despite knowing their illicit origins. Moreover, 88% of respondents express concern over governments’ inability to collect tax revenues due to the illegal trade, undermining public finances.

The report identifies several contributing factors, including porous borders, ineffective penalties, corruption, excessive taxation, and legislative loopholes. These factors not only fuel demand for illicit products but also enable criminal enterprises to expand with impunity.

In response to the findings, Vincent Byrne, Global Anti-Illicit Trade Operations Director at JTI, emphasized the urgent need for coordinated efforts to combat this burgeoning threat. He highlighted the need for enhanced law enforcement cooperation both domestically and internationally to tackle the sophisticated networks behind the illegal trade.

The study reveals that the economic repercussions are staggering, with governments globally estimated to lose billions annually in tax revenue. In the UK alone, the HMRC reported a £2.5 billion loss in 2021 due to illicit tobacco trade, funds that could otherwise bolster social programs and public services.

Each country faces unique challenges: in Canada, disparities in tax harmonization and complex relationships with First Nation states exacerbate the issue, while in France, high taxation and inadequate border controls contribute to the problem. The Philippines has taken legislative steps to classify tobacco smuggling as economic sabotage, reflecting its severity as a national concern.

Moving forward, the report advocates for a multi-faceted approach, including stricter penalties for offenders, enhanced international cooperation, and leveraging anti-money laundering and organized crime laws to dismantle illicit networks. It underscores the importance of maintaining reasonable taxation to deter consumers from turning to cheaper, illegal alternatives.

As nations grapple with this escalating crisis, the report serves as a clarion call for policymakers to prioritize enforcement and regulatory reforms to safeguard public health and economic stability against the illicit tobacco trade’s insidious impact.

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