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Does smuggling negate the impact of a tobacco tax increase?
  1. Tat Chee Tsui
  1. Correspondence to Dr Tat Chee Tsui, School of Law, Trinity College Dublin, Dublin 2, Ireland; tsuit{at}tcd.ie

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The tobacco industry claims that increases in tobacco tax will not discourage people from smoking because smokers will simply substitute taxed cigarettes with smuggled untaxed cigarettes.1 The experience in Hong Kong suggests that smuggled cigarettes are eating into some of the taxed cigarette market share, as the industry suggests. However, despite this increase in the illicit market, higher tobacco tax does effectively reduce total tobacco consumption.

The tobacco duties of Hong Kong on is governed by the Dutiable Commodities Ordinance with just few exceptional circumstance.2 ,3 The analysis below is based on data obtained between 2009 and 2010, and examines the impact of the first increase in tobacco tax in Hong Kong in 8 years.4

Table 1 provides cigarette duties,5 …

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