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  Elizabeth L Allen
  Published on: 4 May 2016

• Published on: 4 May 2016

  Response to article

  • Elizabeth L Allen, Independent Consultant
  • Other Contributors:
    • None

  NOT PEER REVIEWED I am writing in response to sight of an article published by you about my work for the International Tax and Investment Center (ITIC). The ITIC guidebook published in 2011 "The Illicit Trade in Tobacco Products and How to Tackle it" makes it clear in the Executive Summary that it is "a compilation of facts and views from a wide range of sources including respected academics, private sector consultants,...

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  NOT PEER REVIEWED I am writing in response to sight of an article published by you about my work for the International Tax and Investment Center (ITIC). The ITIC guidebook published in 2011 "The Illicit Trade in Tobacco Products and How to Tackle it" makes it clear in the Executive Summary that it is "a compilation of facts and views from a wide range of sources including respected academics, private sector consultants, journalists, international enforcement organizations, government revenue authorities and industry". It also states in the very first footnote that the case studies were provided by industry, consultants and academics and other references include the Framework Convention Alliance, the World Bank Economic of Tobacco Toolkit, ASH Action on Smoking and Health and the WHO and Framework Convention Alliance are listed under "Interesting Links". I wrote this guidebook for ITIC as an independent consultant with academic freedom to ensure it presented a balanced picture of the issues and attributed input to the appropriate sources. I have never lobbied on behalf of an industry or individual company. As the former UK senior civil servant in a revenue authority who was privileged to lead the first UK Alcohol and Tobacco Fraud Review in 1997, my motivation in writing this guidebook has been to pass on my knowledge and experience of the illegal tobacco trade to assist officials in developing countries in improving their administration of excise taxation and anti-smuggling controls. I do not work for the tobacco industry and I have never smoked - in fact, I have suffered from asthma all my life and was delighted to see workplace smoking bans in the UK. I have never sought to undermine tobacco control policies. Rather, I have sought to help the tax and enforcement authorities to reduce opportunities for illegal trade, reduce demand and detect and prosecute the criminals and terrorists who profit from illegal trade drawing heavily on the UK experience in successfully reducing illegal trade in tobacco products from over 20% in 2000 to around 10% currently whilst maintaining one of the highest tax rates in the world. It is undeniable that products that are light, portable and subject to high levels of tax attract criminals. The guidebook (and the second edition published in 2013) makes it clear that there are, however, several drivers and facilitators of illegal trade in tobacco products including tobacco taxation policy, corruption, protectionist measures, inadequate legislation such as penalties, inadequate enforcement and public tolerance though it is my personal view that the economic drivers of supply and demand are the most important. Whilst advocating balanced tax policies in the guidebook, I went on to explain that sustaining high tax rates and maintaining manageable rates of illegal trade can only be achieved through a comprehensive strategic approach encompassing all legitimate stakeholders both public and private sector, national and international - as in the various refreshed versions of the UK Tobacco Strategy. As a former administrator I was trained and required to treat all taxpayers fairly without favouring one industry or one company over another. This has to be a key feature of effective tax and customs administration all over the world. The tobacco industry is a significant payer of excise revenue - second only to the hydrocarbon oil industry - and as long as it sells legal products and complies with legislative requirements it deserves the same treatment as any other industry. It is a feature of good tax administration to have dialogue with taxpayers and their representative associations and I have no hesitation in recommending this way of working to senior officials in Ministries of Finance and Revenue Authorities/Customs around the world. Indeed, the UK has long had and published Memoranda of Agreement with the tobacco industry as well as with other excise industries. I am puzzled by the article's criticism of a reference to Codentify in the 2011 edition of the guidebook as I do not see any such reference. The case study box on page 28 refers to International Track and Trace Standards and the information attributed to the four major international tobacco companies but Codentify is not mentioned as this is merely an illustration of the standards in place among key players in the industry. It is placed after a much more lengthy page on Article 15 of the WHO Framework Convention on Tobacco Control which the conclusions in para. 7.5 fully support but point out that rigorous enforcement, international cooperation and cooperation with the private sector are essential as legislation alone cannot eliminate illicit trade. With trillions of movements of tobacco products across the world daily there are never going to be sufficient enforcement resources to detect all illicit movements. Seizure rates, even in those countries that pride themselves on top class enforcement, do not exceed 20% to 23% and in the EU (see page 9 of the 2013 edition of the guidebook) were around 7% in 2011. Seizure rates can be expected to be considerably less in relation to illicit trade in most developing countries. So, enforcement authorities need all the help they can get from others in the public sector. This includes health and education authorities who are best placed to provide awareness campaigns and develop strategies to reduce demand and it includes help from legitimate industry who can provide additional intelligence on the markets, trends and those suspected of undermining their legal sales in the marketplace i.e. the international criminal organizations and terrorists. Moving on to the criticism of the WCO for allowing me to present a two day course on excise taxation policy, administration and enforcement, I would challenge anyone to present a meaningful course on excise taxation, administration and enforcement without referring to tobacco taxation or to illicit trade in excise products. The course included material on alcohol with input from the Spirits industry and the Beer industry and material on fuel taxation with input from the Oils industry as well as input on tobacco taxation from a representative of the tobacco industry. Customs officials have to deal with numerous products and legislation and their national training rarely provides them with material on excise taxes which they are tasked with protecting on imports, exports and transit shipments. Providing customs officials with basic broad awareness of the key excise taxes, how they work, good administrative and enforcement practices as well as stakeholder perspectives is really important in improving the performance of customs officials around the world. All the course material was thoroughly vetted by the WCO before the course so delegates were assured of receiving balanced and useful material.

  Conflict of Interest:

  None declared

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  Conflict of Interest:
  None declared.

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